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The North Carolina State Budget
Summary of Recommendations
2009-2011
Beverly Eaves Perdue
Governor
The North Carolina State Budget
Summary of Recommendations
2009-2011
Office of State Budget and Management
Office of the Governor
Raleigh, North Carolina
www.osbm.state.nc.us
Charles E. Perusse, State Budget Director
David Brown, Deputy Director for Budget
Jonathan Womer, Deputy Director for Management
March 2009
State of North Carolina
Office of the Governor
Beverly Eaves Perdue
Governor
Office of the Governor · Phone: (919)733-4240 · Fax: (919)733-2120 · Email: governor.office@nc.gov
March 17, 2009
The North Carolina Senate
The Honorable Marc Basnight, President Pro Tempore
The North Carolina House of Representatives
The Honorable Joe Hackney, Speaker
Dear Mr. President, Mr. Speaker, Ladies and Gentlemen of the General Assembly and Fellow North
Carolinians:
The challenges we face together are unprecedented in modern times. North Carolina is in the midst
of its greatest economic crisis since the Great Depression, the result of the rapid and dramatic global
downturn in the housing and financial markets. As families and businesses across our state are
tightening their belts to make ends meet, government must do the same. But, in the process, we
must not neglect the state’s most pressing needs.
My proposed biennial budget makes strategic investments to create jobs and increases overall per
student spending, while ensuring that North Carolina state government lives within its means. It
closes a cumulative budget gap of $6.4 billion over two years, with the estimated shortfall totaling
$3.4 billion in FY 2009-10 and $3.0 in FY 2010-11. The budget contains $2.6 billion in spending
reductions ($1.3 billion in each year); utilizes $2.9 billion of federal recovery monies to support
education and other mission-critical services over the biennium; and recommends targeted revenue
changes totaling $1.3 billion over two years, designed to protect education and help offset
healthcare costs associated with the use of tobacco products and alcohol.
Most programs face reduced or level funding compared to FY 2008-09. However, despite the
difficult road we face, I believe it is critical that we continue making progress in areas that are core
to North Carolina’s values. That is why my budget recommendations focus on:
􀂾􋹇 Growing North Carolina’s Economy
􀂾􋹉 Improving Public Education
􀂾􋹋 Keeping Higher Education Accessible and Affordable
􀂾􋹐 Protecting Our Most Vulnerable Citizens
􀂾􋹋 Keeping Our Communities Safe
􀂾􋹍 Making Government More Efficient and Accountable
􀂾􋹆 Fiscal Responsibility
Growing North Carolina’s Economy
My number one priority is to create jobs. This budget contains several key investments around
infrastructure, assistance to small businesses and workforce development. Specifically, it includes
$50 million in state funds to maximize federal resources for water and sewer, navigation, flood
control, drainage and beach protection projects. The budget invests $7 million in the Main Street
Program which provides grants to communities to revitalize downtown areas and $2 million for the
Small Business Innovation Research matching grant program. Monies also are included to
construct the Biomedical Research Imaging Center in Chapel Hill, which will work collaboratively
with image-based research and cancer research programs in the UNC System. This project will
have a significant impact on health care, particularly in the areas of cancer, drug discovery,
nanotechnology and nanopharmacology, and will create jobs in North Carolina.
The budget provides an additional $2 million to promote North Carolina as a business and tourism
destination, as well as to better market our agriculture products to companies throughout the United
States. It also earmarks $5 million for the Green Business Fund to encourage the growth of
businesses developing green technology. Finally, it provides $36 million in tax relief for small
businesses. Businesses with profits less than $100,000 will be able to exempt the first $25,000 of
net income from tax; businesses with profits between $100,000 and $200,000 will exempt the first
$15,000.
Through my Jobs Now initiative, the budget makes substantial investments in community college
programs focused on preparing students for the new 21st century careers. It includes $5 million to
hire additional faculty to help reduce the state’s backlog for nurses. Funds are provided ($3
million) to support technical education programs in the areas of transportation, industrial, military
and green technology sectors. The budget also provides an additional $5 million annually to
address equipment and technology needs throughout the community college system. Finally, $5
million in federal recovery funds are earmarked to support displaced workers with child care,
tuition and transportation costs while pursuing job training services.
Improving Public Education
Even in these tough economic times, I remain committed to improving public education and
transforming our classrooms. Overall, year to year spending (including federal recovery monies)
increases by $118 million (1.1.%), even though enrollment is expected to decline by .79% over the
same period. Total per student funding increases from $5,597 to $5,736. This budget focuses on
administrative efficiencies and allows local education leaders the flexibility to choose where
savings can be implemented. It was not possible to avoid some reductions to the single largest
expenditure in our budget.
My budget includes $4.7 million for diagnostic assessments, so we can get to kids before they fall
behind in school. We are refocusing our testing requirements to more accurately measure our
students’ progress and to hold our schools accountable. It also recommends additional recurring
funds for innovative dropout prevention programs ($7 million) and statewide support for
underperforming schools in response to the Leandro lawsuit ($3.5 million). Monies also are
provided for the experience-based step increase for teacher salary schedule employees ($64 million)
to fulfill our commitment to meet the national average. Finally, my 2009-11 budget
recommendation does not reduce, redirect or transfer any lottery or corporate income tax receipts
from the Public School Building Capital Fund.
Keeping Higher Education Accessible and Affordable
The investments we make in our current and future workforce are more important than ever during
this economic downturn. My budget fully funds enrollment for all students hoping to attend a
community college (12,519 FTE or +6.2%) or UNC system institution (4,705 FTE or +2.6%). The
budget provides a contingency reserve ($3 million) for community colleges that see a large spike in
enrollment due to deteriorating employment conditions. My budget does not recommend a tuition
increase to ensure access is not impacted.
In addition, my budget takes steps toward fulfilling the “College Promise” of accessible, debt-free
higher education for everyone along with a seamless education path, from pre kindergarten through
vocational, community college or the university, that fit students’ needs. It includes $2.6 million to
expand our early college high schools to 12 new sites and provides an additional $23 million for
need-based financial aid.
Protecting Our Most Vulnerable Citizens
The proposed budget preserves funds that protect and help our most vulnerable populations. It
limits reductions in direct services and does not displace persons currently being served by
Medicaid. Many provider reimbursement rates have been frozen; however, base service rates have
not been reduced. It is imperative that we do not impact our citizens’ ability to gain access to
needed health services.
My budget includes $12 million to purchase an additional 111 local private hospital beds for mental
health patients who require short term care and $3 million to retain 36 overflow beds at Dorothea
Dix Hospital in Raleigh. Additional monies are recommended for the State Children’s Health
Insurance Program, which provides health insurance for an additional 8,000 children from working
families. It earmarks federal recovery funds to reduce the waiting list for child care subsidies.
Finally, this budget provides tax relief to low and moderate-income working families by increasing
the earned income tax credit from 5% to 6.5%.
Keeping Our Communities Safe
This budget invests an additional $12 million per year in the probation system to ensure supervision
is administered swiftly and correctly. It adds 29 supervisor and 117 officer positions to allow for
more manageable caseloads. Funds also are included to raise employee pay grades to improve the
recruitment and retention of officers. Finally, the budget earmarks $10 million in federal recovery
funds for gang-related programs. Monies would be made available to local law enforcement,
juvenile justice and education personnel for services that focus on gang prevention, treatment,
intervention and re-entry programs.
Making Government More Efficient and Accountable
This budget reinforces my commitment to streamline government and make it more transparent,
accountable and efficient. It includes $2.6 billion in savings throughout state government. These
recommendations follow a set of very important principles.
First, wherever possible, the budget proposes recurring savings rather than one-time actions. The
choices are difficult but essential to ensure the long-term health of North Carolina’s finances.
Second, when looking at savings across agencies, one size does not fit all. I asked agency heads to
take a targeted approach when identifying reductions.
It is imperative that we maintain quality in our core service areas that citizens need most. My
budget reduces or eliminates more than 20 programs that are duplicative, costly, inefficient or
nonessential. Finally, the budget looks beyond just identifying easy savings to a deeper discussion
about transitioning from our current incremental budgeting approach to one that focuses on results.
My budget includes additional monies to update the state’s web portal and to implement NC
OpenBook. Making government services more accessible through the web improves service quality
and reduces administrative costs. The budget provides funds to stabilize the BEACON human
resources and payroll system. My budget also continues to reduce the amount of monies transferred
from the Highway Trust Fund to the General Fund.
Fiscal Responsibility
North Carolina is seeing dramatic declines in revenues during this recession, yet we are acting
prudently and decisively to produce a balanced budget. This recommendation is $360 million (or
1.8%) less than the fiscal year 2009 budget, even after assuming $200 million in local Medicaid
expenses – and even after factoring in federal recovery funds. Our population is expected to
increase by 1.5% next year, so the per capita budget will decline by 3.2% (from $2,273 to $2,201)
when compared to 2009. My budget does not authorize any additional debt in 2009-10. Our
willingness to make difficult decisions has not gone unnoticed. We continue to be one of only
seven states with a Triple A rating from each of the major bond rating agencies.
Conclusion
We have a long history of stepping up to the plate and working together when our citizens need us
most. I stand ready to work with you to strengthen and grow our middle class and small businesses;
to improve public education and public safety services throughout our state; to ensure that
government works smart for our citizens; and to expand opportunity for all North Carolinians.
I look forward to working with you this session.
Sincerely,
Bev Perdue
vii
Table of Contents
Letter from the Governor..............................................................................................iii
List of Figures and Tables...............................................................................................ix
Preface.................................................................................................................................xi
Introduction.................................................................................................................... xv
Executive Priorities and Budget Summary...............................................................1
Major Expansion Budget Recommendations
Fiscal Responsibility..................................................................................................17
Education......................................................................................................................18
General Government................................................................................................21
Health and Human Services...................................................................................22
Justice and Public Safety.........................................................................................24
Natural and Economic Resources........................................................................25
Transportation............................................................................................................26
Capital Improvements..............................................................................................30
Teachers and State Employees..............................................................................31
Economy and Revenue
Economy
Outlook for the Nation and State................................................................35
Revenue
General Fund Forecast.....................................................................................38
Highway Fund....................................................................................................43
Highway Trust Fund..........................................................................................46
Recommended Adjustments for Capital Improvements.................................51
Recommended Adjustments for Reserves, Debt Service, and Other..........59
Federal Recovery and Investment............................................................................67
Appendix..........................................................................................................................71
ix
List of Figures and Tables
Figures
1. Distribution of the General Fund Operating Budget....................................3
2. Average Daily Membership Budgeted............................................................18
3. Enrollment in Community College System...................................................19
4. Enrollment in the University System...............................................................20
5. Medicaid Expenditures and Eligibility.............................................................22
6. Funding Sources, NC Transportation Program, 2009-10..........................27
7. Funding Sources, NC Transportation Program, 2010-11..........................28
8. Appropriations, NC Transportation Program, 2009-10.............................28
9. Appropriations, NC Transportation Program, 2010-11.............................29
10. Authorized Proposed Capital Funds................................................................30
11. N.C. Income Expected to Exceed U.S...............................................................37
12. General Fund Revenue.........................................................................................40
13. Highway Fund Revenue Collections................................................................43
14. Highway Trust Fund Revenue Collections.....................................................46
Tables
1. Recommended General Fund Budget...............................................................4
2. Governor’s Recommended General Fund Budget, 2009-10......................5
3. Governor’s Recommended General Fund Budget, 2010-11......................7
4. Governor’s Recommended Highway Fund and Highway
Trust Fund Budgets, 2009-10................................................................................9
5. Governor’s Recommended Highway Fund and Highway
Trust Fund Budgets, 2010-11.............................................................................10
6. Recommended General Fund Availability and Appropriations.............11
7. Recommended Highway Fund Availability and
Appropriations.........................................................................................................12
8. Recommended Highway Trust Fund Availability and
Appropriations........................................................................................................13
9. General Fund Revenue, Detailed Estimates..................................................39
10. General Fund Revenue, Estimates....................................................................41
11. Highway Fund Revenue Availability................................................................45
12. Highway Trust Fund Revenue Availability.....................................................48
x
Appendix Tables
1A. Condition of the General Fund.........................................................................73
1B. Condition of the Highway Fund.......................................................................74
1C. Condition of the Highway Trust Fund.............................................................75
1D. Savings Reserve Account Balance...................................................................76
2. Total Authorized NC State Budget..................................................................77
3A. Total NC State Budget by Function, Department, and
Source of Funds, 2009-10...................................................................................78
3B. Total NC State Budget by Function, Department, and
Source of Funds, 2010-11....................................................................................85
3C. Total NC Transportation Budget by Function and
Source of Funds, 2009-10...................................................................................92
3D. Total NC Transportation Budget by Function and
Source of Funds, 2010-11...................................................................................93
4. Trends in the Total State Budget......................................................................94
5. Total Authorized State Budget by Source of Funds..................................95
6. Highway Fund State Tax and Nontax Revenue..........................................96
7. Highway Trust Fund Tax and Nontax Revenue...........................................97
8. General Fund Tax and Nontax Revenue........................................................98
9. Authorized General Fund Appropriations...................................................99
10. General Fund Operating Appropriation for Public
Schools, Community Colleges, and Higher Education..........................100
xi
Preface
The North Carolina State Budget: Recommended Operating Budget with Performance Manage-ment
Information, 2009-2011 reflects the work of multiple people within the Office of State
Budget and Management (OSBM) and the Office of Economic Recovery and Investment. Bud-get
administrators and analysts, economists, technical staff, and paraprofessionals are listed
below by administrative area.
This document is available online at www.osbm.state.nc.us. For additional information about
its contents, please contact the appropriate administrator at the e-mail address cited below
or by telephone at 919/807-4700. The mailing address for OSBM is 20320 Mail Service Center,
Raleigh, NC 27699-0320.
Office of State Budget and Management
Charles Perusse, State Budget Director (charles.perusse@osbm.nc.gov)
Debbie Young, Special Assistant to State Budget Director (debbie.young@osbm.nc.gov)
Business Office
Arnetha Dickerson, Business Officer (arnetha.dickerson@osbm.nc.gov)
Frances Doak, Accounting Technician (frances.doak@osbm.nc.gov)
Laveta Pickett, Accounting Technician (laveta.pickett@osbm.nc.gov )
Human Resources
Ursula Hairston, Human Resources Director (ursula.hairston@osbm.nc.gov)
Shelia Stewart, Human Resources Coordinator (shelia.stewart@osbm.nc.gov)
Tonya Austin, Human Resources Associate (tonya.austin@osbm.nc.gov)
Internal Audit
Barbara Baldwin, Internal Audit Manager (barbara.baldwin@osbm.nc.gov)
Michele Evans, Internal Auditor (michele.evans@osbm.nc.gov)
Regina Hill, Internal Auditor – Information Systems (regina.hill@osbm.nc.gov)
Courtney Michelle, Internal Auditor (courtney.michelle@osbm.nc.gov)
Quality Assurance
vacant, Director of Quality Assurance
Betty Haley, Research Assistant (betty.haley@osbm.nc.gov)
xii
David Brown, Deputy Director for Budget (david.brown@osbm.nc.gov)
Kela Lockamy, Executive Assistant to Deputy State Budget Directors
(kela.lockamy@osbm.nc.gov)
Julie Mitchel, Associate State Budget Director (julie.mitchel@osbm.nc.gov)
Susie Esealuka, Team Assistant (susie.esealuka@osbm.nc.gov)
Pat Taylor, Team Assistant (pat.taylor@osbm.nc.gov)
Education
Elizabeth Grovenstein, Assistant State Budget Officer
(elizabeth.grovenstein@osbm.nc.gov)
Pam Leaman, Budget Analyst (pam.leaman@osbm.nc.gov)
Bryan Conrad, Budget Analyst (bryan.conrad@osbm.nc.gov)
Joyce Wallace, Budget Analyst (joyce.wallace@osbm.nc.gov)
vacant, Budget Analyst
Health and Human Services
Jennifer Hoffmann, Assistant State Budget Officer (jennifer.hoffmann@osbm.nc.gov)
Pam Kilpatrick, Budget Analyst (pam.kilpatrick@osbm.nc.gov)
Kari Barsness, Budget Analyst (kari.barsness@osbm.nc.gov)
Melvin Lee, Budget Analyst (melvin.lee@osbm.nc.gov)
Wayne Williams, Budget Analyst (wayne.williams@osbm.nc.gov)
Infrastructure
Jim Lora, Assistant State Budget Officer (jim.lora@osbm.nc.gov)
Adam Breuggemann, Budget Analyst (adam.breuggemann@osbm.nc.gov)
Kristen Crosson, Budget Analyst (kristen.crosson@osbm.nc.gov)
Jennifer Wimmer, Budget Analyst (jennifer.wimmer@osbm.nc.gov)
Sarah Porper, IT Budget Analyst (sarah.porper@osbm.nc.gov)
Justice and Public Safety / Natural and Environmental Resources / General Government
Sheryl Kelly, Assistant State Budget Officer (sheryl.kelly@osbm.nc.gov)
Donna Cox, Budget Analyst (donna.cox@osbm.nc.gov)
Aaron Gallagher, Budget Analyst (aaron.gallagher@osbm.nc.gov)
Jack Hubbard, Budget Analyst (jack.hubbard@osbm.nc.gov)
Alicia James, Budget Analyst (alicia.james@osbm.nc.gov)
Trevor Minor, Budget Analyst (trevor.minor@0sbm.nc.gov)
Cheryl Reed, Budget Analyst (cheryl.reed@osbm.nc.gov)
Transportation
Mercidee Benton, Assoc. State Budget Officer for Transportation
(mercidee.benton@osbm.nc.gov)
xiii
Jonathan Womer, Deputy Director for Management (jonathan.womer@osbm.nc.gov)
Kela Lockamy, Executive Assistant to Deputy State Budget Directors
(kela.lockamy@osbm.nc.gov)
Demographic and Economic Analysis
Nathan Knuffman, Associate State Budget Officer (Nathan.Knuffman@osbm.nc.gov)
Warren Plonk, Economic Analyst (warren.plonk@osbm.nc.gov)
Will Crumbley, Economic Analyst (william.crumbley@osbm.nc.gov)
Jennifer Song, State Demographer (jennifer.song@osbm.nc.gov)
Government Evaluation and Review
Anne Bander, Assistant State Budget Officer (anne.bander@osbm.nc.gov)
Angela Houston, Management Analyst (angela.y.houston@osbm.nc.gov)
Philip Bartholomew, Management Analyst (philip.bartholomew@osbm.nc.gov)
Donald Crooke, Management Analyst (donald.crooke@osbm.nc.gov)
John Leskovec, Management Analyst (john.leskovec@osbm.nc.gov)
Joe Turlington, Management Analyst (joe.turlington@osbm.nc.gov)
Strategic Management
Erin Matteson, Associate State Budget Officer (erin.matteson@osbm.nc.gov)
Bill Stockard, Management Analyst (bill.stockard@osbm.nc.gov)
Bob Coats, Business and Technology Applications Analyst (bob.coats@osbm.nc.gov)
Brandon James, Management Analyst (brandon.james@osbm.nc.gov)
Joe White, Management Analyst (joseph.white@osbm.nc.gov)
Technology and Data Services
Joel Sigmon, Assistant State Budget Officer (joel.sigmon@osbm.nc.gov)
Francine Stephenson, Business and Technology Applications Specialist
(francine.stephenson@osbm.nc.gov)
Wayne Crews, Business and Technology Applications Specialist
(wayne.crews@osbm.nc.gov)
Agness Gunter, Business and Technology Applications Specialist
(agness.gunter@osbm.nc.gov)
Paula Jones, Business and Technology Applications Analyst (paula.a.jones@osbm.nc.gov)
Ernest Pecounis, Business and Technology Applications Analyst
(ernest.pecounis@osbm.nc.gov)
Lucy Ringland, Technical Editor/Applications Analyst (lucy.ringland@osbm.nc.gov)
Paul Young, Business and Technology Applications Specialist (paul.young@osbm.nc.gov)
Office of Economic Recovery and Investment
Dempsey Benton, Director (dempsey.benton@osbm.nc.gov)
xv
son of the economic conditions in North Carolina
to national averages. The most current revenue
forecast is explained. Estimates of fund availability
for the General Fund, Highway Fund, and High-way
Trust Fund show the supporting basis for the
recommended state budget (see tables 6, 7-8, 10,
and 11-12).
Statewide types of budget adjustments
Brief explanations of recommended adjustments
to the budget for statewide areas, such as capital
improvements, salaries and benefits, and debt
service, are contained in this summary volume.
These appear in sections titled “Capital Improve-ments”
and “Reserves, Debt Service, and Other
Adjustments.”
Budgets by department, including results-based
information
Details on the recommendations for each bud-geted
budget code, other than those presented
for statewide types of adjustments, appear in six
supporting documents organized by functional
area: Education (volume 1), General Government
(volume 2), Health and Human Services (volume
3), Justice and Public Safety (volume 4), Natural
and Economic Resources (volume 5), and Trans-portation
(volume 6).
As required by the State Budget Act, these sup-porting
documents distinguish between continu-ation
requirements (called the base budget) and
recommended adjustments to the base budget.
These documents include the governor’s recom-mended
adjustments to the base budget for the
General Fund, Highway Fund, Highway Trust Fund,
and the Turnpike Authority. Only the base budgets
are presented for budget codes that characterize
special funds, enterprise funds, trust and agency
funds (except for three transportation budget
codes), and service funds.
Introduction
Governor’s recommended budget for the
state
The purpose of this document is to summarize
the governor’s recommended state budget for the
two fiscal years of the 2009-11 biennium. Gover-nor
Perdue’s priorities are listed in her transmittal
letter, which precedes the overview of key recom-mendations
for adjustments to the base budget
(continuation budget). Included in this publication
are recommendations for expenditures from the
General Fund, Highway Fund, and the Highway
Trust Fund. Recommended expenditures for capi-tal
improvements and for reserves, debt service,
and other adjustments are also included. Budget
codes for federal funds and institutional revenue
funds do not appear in the governor’s recom-mended
budget document. This year, however,
information about the impact of the American
Recovery and Reinvestment Act (federal stimulus
funds) on the North Carolina budget is included in
the section titled “Federal Fecovery Funds.”
Summary tables
A summary of General Fund recommendations
by department/budget code for the entire state
budget appears in tables 2 and 3, “Governor’s
Recommended General Fund Budget, 2009-10”
and “Governor’s Recommended General Fund
Budget, 2010-11.” Summaries of recommendations
for expenditures supported by the Highway Fund
and the Highway Trust Fund appear in tables 4 and
5, “Governor’s Recommended Highway Fund and
Highway Trust Fund Budget, 2009-10” and “Gover-nor’s
Recommended Highway Fund and Highway
Trust Fund Budget, 2010-11.”
Fiscal impact and revenue forecast
Also included in this summary volume are an
analysis of the state’s economic and financial out-look
for the upcoming biennium and a compari-
xvi
Integrated with fiscal details in the supplemental
volumes are department missions, goals, fund de-scriptions,
key services supported by each fund or
budget code, costs of services in dollars and staff,
and performance measures. The inclusion of this
budget development and performance manage-ment
information is another step in a multiyear
effort to provide members of the North Carolina
General Assembly and the public with expanded
budget and operational information. These
budgeting elements are intended to improve the
reader’s understanding of why an agency ex-ists,
what the agency does, how much money its
services cost, and how effective its services are.
Ultimately, this information is designed to improve
funding, planning, and management decisions in
state government.
Line item details
Line item base budget details for all budgeted
budget codes and their component funds are
available in a PDF file on the Web site of the Office
of State Budget and Management, www.osbm.
state.nc.us.
1
Economic Priorities
and
Budget Summary
3
•• Helping our most vulnerable populations
by improving health care and mental health
programs, and protecting and supporting
children and seniors.
•• Increasing the safety and security of our com-munities.
•• Developing a budget that is healthy, reason-able,
and fiscally responsible while maintain-ing
the state’s AAA bond rating.
Governor Perdue’s priorities for this budget
include:
•• Creating jobs by investing in infrastructure
projects, expanding workforce development
programs, and promoting the growth of small
business and industry.
•• Ensuring our success in the 21st century by
making a world-class education available to all
North Carolina students.
•• Reorganizing and reforming government to
be open, transparent and accountable to the
citizens of the state.
Economic Priorities and
Budget Summary
for 2009-11
Figure 1
Distribution of the General Fund
Operating Budget, 2009-10
University System
14%
Community
Colleges 5% Public Schools 38%
Debt Service /
Other Reserves 3%
Gen Gov't / Nat'l &
Econ Res 4%
Justice & Public
Safety 11%
Health & Human
Services 25%
4
Percent change Percent change Percent of
Authorized Revised Recommended Rec. 2009-10 vs. Rec. 2009-10 vs. Total
2008-09 2008-09 2009-10 Authorized 2009-10 Revised 2009-10 Oper Budget
Public Schools 8,356 8,210 7,948 -4.9% -3.2% 37.9%
Community Colleges 1,017 965 1,027 1.0% 6.4% 4.9%
University System 2,894 2,727 2,858 -1.2% 4.8% 13.6%
Total Education 12,267 11,902 11,833 -3.5% -0.6% 56.5%
Health & Human Services 4,957 4,764 5,285 6.6% 10.9% 25.2%
Justice & Public Safety 2,210 2,100 2,202 -0.4% 4.9% 10.5%
Gen Gov't / Nat'l & Econ Res 1,070 986 907 -15.2% -8.0% 4.3%
Debt Service / Other Reserves 723 610 727 0.6% 19.2% 3.5%
Total Operating Budget 21,227 20,362 20,954 -1.3% 2.9% 100%
Capital Improvements 129 23 27 -79.1% 17.4%
Total General Fund Budget 21,356 20,385 20,981 -1.8% 2.9%
1. For comparison purposes, the FY 2009-10 recommended appropriation shown in Table 1 for each program area includes the
recommended increases in employee pay, retirement system contributrions, and state health plan premiums that are appropriated in a
statewide reserve and distributed to each agency after enactment of the budget.
Table 1
Recommended General Fund Budget FY 2009-10 1
Compared with Authorized General Fund Appropriations, 2008-09
Appropriations ($ millions)
5
2009-10
Recommended Appropriation Appropriation 2009-10 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Education:
13510 Public Education $ 8,245,341,827 $ ( 251,469,282) $ ( 66,815,990) - $ 1 5,517,871 $ 5 ,165,917 2 3.00 $ ( 297,601,484) $ 7 ,947,740,343 2 3.00
16800 Community Colleges 1,072,571,152 ( 64,063,824) - ( 9.00) 1 8,085,000 2 00,000 8 .00 ( 45,778,824) 1 ,026,792,329 ( 1.00)
160xx University System 3,026,185,255 ( 179,837,189) ( 15,627,121) ( 75.60) 2 3,597,311 4,000,000 2 ( 167,866,999) 2 ,858,318,256 ( 73.60)
Total Education 12,344,098,234 ( 495,370,295) ( 82,443,111) ( 84.60) 5 7,200,182 9,365,917 3 3.00 ( 511,247,307) 1 1,832,850,928 ( 51.60)
General Government:
14100 Administration 78,170,163 (4,402,258) (315,011) (29.00) - 250,000 - (4,467,269) 73,702,894 (29.00)
13300 State Auditor 14,389,111 (1,064,333) (100,266) (5.00) - - - (1,164,599) 13,224,512 (5.00)
14800 Cultural Resources 77,933,037 (4,743,333) (370,444) (17.25) - - - (5,113,777) 72,819,260 (17.25)
14802 Cultural Resources - Roanoke Island 2,095,402 (136,764) (3,588) - - - - (140,352) 1,955,050 -
11000 General Assembly 62,347,066 (3,543,726) (1,141,554) - - - - (4,685,280) 57,661,786 -
13000 Governor's Office 6,616,233 (502,702) - - - - - (502,702) 6,113,531 -
13010 NC Housing Finance 14,608,417 - - - - - - - 14,608,417 -
13900 Insurance 33,824,822 (1,883,772) (296,197) - - - - (2,179,969) 31,644,853 -
13901 Insurance - Worker's Comp. Fund 4,500,000 - (2,500,000) - - - - (2,500,000) 2,000,000 -
13100 Lieutenant Governor 966,706 (12,023) (16,831) - - - - (28,854) 937,852 -
18210 Office of Administrative Hearings 4,266,407 (298,952) - - - - - (298,952) 3,967,455 -
14700 Revenue 91,347,503 (6,426,907) - (31.00) - - - (6,426,907) 84,920,596 (31.00)
13200 Secretary of State 11,854,656 (743,936) - (2.00) - - - (743,936) 11,110,720 (2.00)
18025 State Board of Elections 6,627,101 (403,272) (40,007) - - - - (443,279) 6,183,822 -
13005 State Budget and Management (OSBM) 7,144,221 (550,375) - - - - - (550,375) 6,593,846 -
13085 OSBM-Special Appropriations 4,280,000 (7,000) - - - 1,000,000 - 993,000 5,273,000 -
14160 Controller's Office 24,536,602 (1,469,482) (55,965) (5.75) 600,000 - 5.00 (925,447) 23,611,155 (0.75)
13410 State Treasurer 11,150,002 (660,305) (119,053) (1.00) - - - (779,358) 10,370,644 (1.00)
13412 State Treasurer - Retirement / Benefits 10,804,671 - - - - - - - 10,804,671 -
Total General Government 467,462,120 (26,849,140) (4,958,916) (91.00) 600,000 1,250,000 5.00 (29,958,056) 437,504,064 (86.00)
Health and Human Services:
14410 Central Administration 74,014,863 (23,080,973) (1,505,000) - 950,000 - - (23,635,973) 50,378,890 -
14411 Aging 37,592,841 (190,204) (50,000) (1.00) 1,500,000 - - 1,259,796 38,852,637 (1.00)
14420 Child Development 305,403,137 (718,295) (25,130,955) (1.00) - - - (25,849,250) 279,553,887 (1.00)
14424 Education Services 40,827,434 (2,308,334) (151,679) (35.00) - - - (2,460,013) 38,367,421 (35.00)
14430 Public Health 195,214,007 (9,009,966) (2,074,119) (9.00) 247,000 - - (10,837,085) 184,376,922 (9.00)
14440 Social Services 236,218,110 (9,779,903) (14,575,400) - - - - (24,355,303) 211,862,807 -
14445 Medical Assistance 3,681,276,113 (147,026,271) - - - 403,706 - (146,622,565) 3,534,653,548 -
14446 Child Health 68,789,628 (241,310) - - 4,329,934 - 5.00 4,088,624 72,878,252 5.00
14450 Services for the Blind 11,704,522 (294,450) - - - - - (294,450) 11,410,072 -
14460 Mental Health/DD/SAS 819,613,620 (11,640,378) (21,060,455) (222.00) 12,270,326 3,000,000 174.75 (17,430,507) 802,183,113 (47.25)
14470 Health Service Regulation 19,271,921 (1,258,428) - (2.00) - - - (1,258,428) 18,013,493 (2.00)
14480 Vocational Rehabilitation 46,418,743 (4,323,308) - - - - - (4,323,308) 42,095,435 -
Total Health and Human Services 5,536,344,939 (209,871,820) (64,547,608) (270.00) 19,297,260 3,403,706 179.75 (251,718,462) 5,284,626,477 (90.25)
Justice and Public Safety:
14500 Correction 1,384,910,571 (72,962,507) (6,311,047) (658.00) 10,224,888 929,977 131.00 (68,118,689) 1,316,791,882 (527.00)
14900 Crime Control & Public Safety 43,925,878 (4,291,829) - (22.00) 1,293,000 200,000 - (2,798,829) 41,127,049 (22.00)
12000 Judicial 497,649,235 (25,054,761) (1,466,541) - - - - (26,521,302) 471,127,933 -
12001 Judicial - Indigent Defense 133,881,190 (5,135,174) (5,030,000) (12.50) - - - (10,165,174) 123,716,016 (12.50)
13600 Justice 100,441,147 (6,153,476) - (9.00) - - - (6,153,476) 94,287,671 (9.00)
14060 Juvenile Justice 172,484,415 (17,189,854) (218,393) (51.00) - - - (17,408,247) 155,076,168 (51.00)
Total Justice and Public Safety 2,333,292,436 (130,787,601) (13,025,981) (752.50) 11,517,888 1,129,977 131.00 (131,165,717) 2,202,126,719 (621.50)
Reductions Expansion
Table 2
Governor's Recommended General Fund Budget
2009-10
6
2009-10
Recommended Appropriation Appropriation 2009-10 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Reductions Expansion
Table 2
Governor's Recommended General Fund Budget
2009-10
Natural and Economic Resources:
13700 Agriculture & Consumer Services 65,402,492 (5,175,696) (1,008,594) (26.70) - 500,000 - (5,684,290) 59,718,202 (26.70)
14600 Commerce 46,019,823 (4,550,466) (438,996) (10.00) 504,561 6,967,104 13.00 2,482,203 48,502,026 3.00
14601 Commerce - State Aid 55,129,374 - - - 3,185,944 11,750,000 - 14,935,944 70,065,318 -
14300 Environment and Natural Resources 212,524,097 (18,872,405) (3,201,115) (62.83) 9,482,800 - - (12,590,720) 199,933,377 (62.83)
14301 Clean Water Management Trust 100,000,000 - (25,000,000) - - - - (25,000,000) 75,000,000 -
13800 Labor 19,064,773 (3,212,229) - (38.00) - - - (3,212,229) 15,852,544 (38.00)
Total Natural & Economic Resources 498,140,559 (31,810,796) (29,648,705) (137.53) 13,173,305 19,217,104 13.00 (29,069,092) 469,071,467 (124.53)
14222 Transportation - - - - - - - - - -
Net Agency 21,179,338,288 (894,689,652) (194,624,321) (1,335.63) 101,788,635 34,366,704 361.75 (953,158,634) 20,226,179,655 (973.88)
19600 Capital Improvements - - - - - 27,600,000 - 27,600,000 27,600,000 -
Debt Service:
19420 General Debt Service 670,494,697 (4,000,000) (3,500,000) - - - - (7,500,000) 662,994,697 -
19425 Federal Reimbursement 1,616,380 - - - - - - - 1,616,380 -
Total Debt Service 672,111,077 (4,000,000) (3,500,000) - - - - (7,500,000) 664,611,077 -
Reserves and Adjustments:
19001 Contingency and Emergency Reserve 5,000,000 - - - - - - - 5,000,000 -
19003 Legislative Compensation Reserve - - - - - - - - - -
190xx Teacher Salary Schedule Employees' Reserve 64,726,385 - - - - - - - 64,726,385 -
19004 Salary Adjustment Reserve 4,500,000 (4,500,000) - - - - - (4,500,000) - -
190xx Economic and Recovery Section Reserve - - - - - 1,277,682 15.00 1,277,682 1,277,682 15.00
190xx Health Plan Reduction for Employees who opt
out of State Health Plan
- (25,000,000) - - - - - (25,000,000) (25,000,000) -
190xx 2010 Census Local Promotion - - - - - 750,000 750,000 750,000 -
19013 Job Development Incentive Grants Reserve 27,400,000 - - - - - - - 27,400,000 -
190xx Freeze Longevity Payments - - (173,000,000) - - - - (173,000,000) (173,000,000) -
190xx Administrative Support Reduction Statewide
Reserve
- (3,000,000) - (75.00) - - - (3,000,000) (3,000,000) (75.00)
190xx Budget E-Procurement Receipts - - - - - - - - - -
19043 Health Plan Reserve 125,000,000 - - - - - - - 125,000,000 -
19047 Retirement Rate Adjustment Reserve 21,000,000 - - - - - - - 21,000,000 -
19044 IT Initiative 14,821,416 - - - - - - - 14,821,416 -
19xxx Performance Management System Reserve - - - - 500,000 2,750,000 - 3,250,000 3,250,000 -
19xxx Transparency & Accountability Reserve - - - 500,000 - - 500,000 500,000 -
Total Reserves and Adjustments 262,447,801 (32,500,000) (173,000,000) (75.00) 1,000,000 4,777,682 15.00 (199,722,318) 62,725,483 (60.00)
Total $ 22,113,897,166 $ (931,189,652) $ (371,124,321) (1,410.63) $ 102,788,635 $ 66,744,386 376.75 $ (1,132,780,952) $ 20,981,116,215 (1,033.88)
7
2010-11
Recommended Appropriation Appropriation 2010-11 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Education:
13510 Public Education $ 8,358,798,223 $ ( 254,111,425) $ ( 11,068,369) - $ 1 5,517,871 $ - 2 3.00 $ ( 249,661,923) $ 8 ,109,136,300 2 3.00
16800 Community Colleges 1,114,034,594 ( 64,380,639) - ( 9.00) 1 8,492,300 - 8 .00 ( 45,888,339) 1 ,068,146,255 ( 1.00)
160xx University System 3,100,871,575 ( 177,306,670) ( 18,463,885) ( 121.80) 2 3,597,311 - 2 ( 172,173,244) 2 ,928,698,331 ( 119.80)
Total Education 12,573,704,392 ( 495,798,734) ( 29,532,254) ( 130.80) 5 7,607,482 - 3 3.00 ( 467,723,506) 1 2,105,980,886 ( 97.80)
General Government:
14100 Administration 78,362,881 (4,558,568) (315,011) (29.00) - - - (4,873,579) 73,489,302 (29.00)
13300 State Auditor 14,405,383 (1,064,333) (100,266) (5.00) - - - (1,164,599) 13,240,784 (5.00)
14800 Cultural Resources 79,329,609 (4,743,333) (370,444) (17.25) - - - (5,113,777) 74,215,832 (17.25)
14802 Cultural Resources - Roanoke Island 2,095,402 (136,764) (3,588) - - - - (140,352) 1,955,050 -
11000 General Assembly 64,056,544 (3,700,916) (984,364) - - - - (4,685,280) 59,371,264 -
13000 Governor's Office 6,622,879 (503,167) - - - - - (503,167) 6,119,712 -
13010 NC Housing Finance 14,608,417 - - - - - - - 14,608,417 -
13900 Insurance 33,887,006 (1,883,772) (296,197) - - - - (2,179,969) 31,707,037 -
13901 Insurance - Worker's Comp. Fund 4,500,000 - (2,500,000) - - - - (2,500,000) 2,000,000 -
13100 Lieutenant Governor 966,706 (12,023) (16,831) - - - - (28,854) 937,852 -
18210 Office of Administrative Hearings 4,279,242 (298,952) - - - - - (298,952) 3,980,290 -
14700 Revenue 91,440,473 (6,426,907) - (31.00) - - - (6,426,907) 85,013,566 (31.00)
13200 Secretary of State 11,928,530 (743,936) - (2.00) - - - (743,936) 11,184,594 (2.00)
18025 State Board of Elections 6,630,894 (403,272) (40,007) - - - - (443,279) 6,187,615 -
13005 State Budget and Management (OSBM) 7,147,928 (550,634) - - - - - (550,634) 6,597,294 -
13085 OSBM-Special Appropriations 4,280,000 (7,000) - - - - - (7,000) 4,273,000 -
14160 Controller's Office 24,568,908 (1,469,482) (55,965) (5.75) 1,200,000 - 10.00 (325,447) 24,243,461 4.25
13410 State Treasurer 11,163,790 (660,305) (119,053) (1.00) - - - (779,358) 10,384,432 (1.00)
13412 State Treasurer - Retirement / Benefits 10,804,671 - - - - - - - 10,804,671 -
Total General Government 471,079,263 (27,163,364) (4,801,726) (91.00) 1,200,000 - 10.00 (30,765,090) 440,314,173 (81.00)
Health and Human Services:
14410 Central Administration 74,482,593 (23,080,973) - - 950,000 - - (22,130,973) 52,351,620 -
14411 Aging 37,594,640 (190,204) (50,000) (1.00) 1,500,000 - - 1,259,796 38,854,436 (1.00)
14420 Child Development 305,417,178 (718,295) (3,800,000) (1.00) - - - (4,518,295) 300,898,883 (1.00)
14424 Education Services 40,879,342 (2,308,334) (151,679) (35.00) - - - (2,460,013) 38,419,329 (35.00)
14430 Public Health 198,230,503 (10,150,097) (2,074,119) (9.00) 247,000 - - (11,977,216) 186,253,287 (9.00)
14440 Social Services 234,498,543 (9,779,903) (6,530,294) - - - - (16,310,197) 218,188,346 -
14445 Medical Assistance 3,933,921,911 (172,955,145) - - - - - (172,955,145) 3,760,966,766 -
14446 Child Health 68,789,628 (341,373) - - 16,058,748 - 5.00 15,717,375 84,507,003 5.00
14450 Services for the Blind 11,763,464 (353,391) - - - - - (353,391) 11,410,073 -
14460 Mental Health/DD/SAS 834,943,177 (18,380,526) (31,662,312) (345.50) 12,270,326 - - (37,772,512) 797,170,665 (345.50)
14470 Facility Services 19,277,259 (1,258,428) - (2.00) - - - (1,258,428) 18,018,831 (2.00)
14480 Vocational Rehabilitation 46,762,707 (4,654,214) - - - - - (4,654,214) 42,108,493 -
Total Health and Human Services 5,806,560,945 (244,170,883) (44,268,404) (393.50) 31,026,074 - 5.00 (257,413,213) 5,549,147,732 (388.50)
Justice and Public Safety:
14500 Correction 1,406,791,264 (95,905,014) (989,047) (658.00) 12,990,156 9,757 151.00 (83,894,148) 1,322,897,116 (507.00)
14900 Crime Control & Public Safety 44,067,870 (4,291,829) - (22.00) 1,293,000 - - (2,998,829) 41,069,041 (22.00)
12000 Judicial 507,638,940 (25,054,761) (884,043) - - - - (25,938,804) 481,700,136 -
12001 Judicial - Indigent Defense 132,320,396 (5,135,174) - (12.50) - - - (5,135,174) 127,185,222 (12.50)
13600 Justice 101,047,019 (6,348,918) (215,000) (9.00) - - - (6,563,918) 94,483,101 (9.00)
14060 Juvenile Justice 172,651,108 (17,189,854) (218,393) (51.00) - - - (17,408,247) 155,242,861 (51.00)
Total Justice and Public Safety 2,364,516,597 (153,925,550) (2,306,483) (752.50) 14,283,156 9,757 151.00 (141,939,120) 2,222,577,477 (601.50)
Reductions Expansion
Table 3
Governor's Recommended General Fund Budget
2010-11
8
2010-11
Recommended Appropriation Appropriation 2010-11 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Reductions Expansion
Table 3
Governor's Recommended General Fund Budget
2010-11
Natural and Economic Resources:
13700 Agriculture & Consumer Services 65,638,839 (5,175,696) (1,008,594) (26.70) - - - (6,184,290) 59,454,549 (26.70)
14600 Commerce 46,028,986 (4,550,466) (438,996) (10.00) 504,561 3,000,000 3.00 (1,484,901) 44,544,085 (7.00)
14601 Commerce - State Aid 55,129,374 - - - 3,185,944 - - 3,185,944 58,315,318 -
14300 Environment and Natural Resources 214,924,435 (18,872,405) (3,201,115) (62.83) 9,482,800 - - (12,590,720) 202,333,715 (62.83)
14301 Clean Water Management Trust 100,000,000 - (25,000,000) - - - - (25,000,000) 75,000,000 -
13800 Labor 19,092,834 (3,212,229) - (38.00) - - - (3,212,229) 15,880,605 (38.00)
Total Natural & Economic Resources 500,814,468 (31,810,796) (29,648,705) (137.53) 13,173,305 3,000,000 3.00 (45,286,196) 455,528,272 (134.53)
14222 Transportation - - - - - - - - - -
Net Agency 21,716,675,665 (952,869,327) (110,557,572) (1,505.33) 117,290,017 3,009,757 202.00 (943,127,125) 20,773,548,540 (1,303.33)
19600 Capital Improvements - - - - - - - - - -
Debt Service:
19420 General Debt Service 739,878,445 (4,000,000) - - - - - (4,000,000) 735,878,445 -
19425 Federal Reimbursement 1,616,380 - - - - - - - 1,616,380 -
Total Debt Service 741,494,825 (4,000,000) - - - - - (4,000,000) 737,494,825 -
Reserves and Adjustments:
19001 Contingency and Emergency Reserve 5,000,000 - - - - - - - 5,000,000 -
19003 Legislative Compensation Reserve - - - - - - - - - -
19004 Salary Adjustment Reserve 4,500,000 (4,500,000) - - - - - (4,500,000) - -
19xxx Transparency & Accountability Reserve - - - - 500,000 - - 500,000 500,000 -
19013 Job Development Incentive Grants Reserve 27,400,000 - - - - - - - 27,400,000 -
190xx Teacher Salary Schedule Employees' Reserve 56,051,665 - - - - - - - 56,051,665
190xx Freeze Longevity Payments - - (177,800,000) - - - - (177,800,000) (177,800,000) -
19019 Gang Initiative - - - - - - - - - -
19043 Health Plan Reserve 228,000,000 - - - - - - - 228,000,000 -
190xx Administrative Support Reduction Statewide
Reserve
- (4,000,000) - (100.00) - - - (4,000,000) (4,000,000) (100.00)
190xx Budget E-Procurement Receipts - (10,000,000) - - (10,000,000) (10,000,000)
190xx Economic and Recovery Section Reserve - 1,062,872 15.00 1,062,872 1,062,872 15.00
19047 Retirement Rate Adjustment Reserve 21,000,000 - - - - - - - 21,000,000 -
190xx Health Plan Reduction for E"ee's" opt out of the - (25,000,000) - - - - - (25,000,000) (25,000,000) -
19044 IT Initiative 14,821,416 - - - - - - - 14,821,416 -
19xxx Performance Management System Reserve - - - - 500,000 500,000 - 1,000,000 1,000,000 -
Total Reserves and Adjustments 356,773,081 (43,500,000) (177,800,000) (100.00) 1,000,000 1,562,872 15.00 (218,737,128) 138,035,953 (85.00)
Total $ 22,814,943,571 $ (1,000,369,327) $ (288,357,572) (1,605.33) $ 118,290,017 $ 4,572,629 217.00 $ (1,165,864,253) $ 21,649,079,318 (1,388.33)
9
)
)
)
)
)
)
)
)
)
))
)
)
Table 4
Governor's Recommended Highway Fund and Highway Trust Fund Budget
2009-10
Reductions Expansion
2009-10
Recommended Appropriation Appropriation 2009-10 Net
Continuation Supported Supported Net Approved Position
Function Appropriation Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
DOT Administration 86,303,924 (3,735,605) (1,757,797) (6.00) - - - (5,493,402 80,810,522 (6.00)
Division of Highways
Administration 34,905,207 (1,362,581) (603,643) (16.00) - - - (1,966,224 32,938,983 (16.00)
Construction 122,481,404 (2,660,000) - - 11,689,860 - - 9,029,860 131,511,264 -
Maintenance 897,149,144 (51,965,269) (25,835,269) - - - - (77,800,538 819,348,606 -
Planning and Research 4,055,402 - - - - - - 4,055,402 -
OSHA Program 425,000 (52,208) (17,403) - - - (69,611) 355,389 -
Ferry Operations 28,765,439 (2,155,497) - - 3,116,267 480,000 79.00 1,440,770 30,206,209 79.00
State Aid
Municipalities 84,481,404 - - - 2,589,860 - 2,589,860 87,071,264 -
Public Transportation 96,544,229 (16,366,078) (8,582,189) - - (24,948,267 71,595,962 -
Airports 19,349,592 (1,128,445) (871,555) - - (2,000,000 17,349,592 -
Railroads 17,101,153 - - - - - 17,101,153 -
Governor's Highway Safety Program 351,779 - - - - - 351,779 -
Division of Motor Vehicles 105,621,605 (2,083,008) (2,166,603) - 264,359 96,460 4.00 (3,888,792 101,732,813 4.00
Other State Agencies 297,178,677 (7,910,922) (3,174,280) - 590,000 - (10,495,202 286,683,475 -
Reserves and Transfers 4,222,758 (8,035,171) - - 6,200,000 - - (1,835,171 2,387,587 -
Capital Improvements - - - -
Total Highway Fund 1,798,936,717 (97,454,784) (43,008,739) (22.00) 24,450,346 576,460 83.00 (115,436,717) 1,683,500,000 61.00
Administration 48,602,400 (7,510,080) - - - - - (7,510,080 41,092,320 -
Construction
Intrastate System 445,444,392 (92,770,076) - - - - - (92,770,076 352,674,316 -
Urban Loop System 148,271,856 (37,512,354) - - - - - (37,512,354 110,759,502 -
Secondary Roads 67,510,836 (9,733,745) - - - - - (9,733,745 57,777,091 -
State Aid to Munipalities 49,627,687 (9,733,745) - - - - - (9,733,745 39,893,942- -
Bonds -
Bond Redemption 54,065,000 - - - - - - - 54,065,000
Bond Interest 28,666,000 - - - - - - - 28,666,000-
NC Turnpike Authority 64,000,000 - - - - - - - 64,000,000
Transfer to the General Fund 108,561,829 - - - - - - - 108,561,829 -
Total Highway Trust Fund 1,014,750,000 (157,260,000) - - - - - (157,260,000) 857,490,000 -
10
)
)
)
)
)
)
)
)
)
))
)
Table 5
Governor's Recommended Highway Fund and Highway Trust Fund Budget
2010-11
Reductions Expansion
2010-11
Recommended Appropriation Appropriation 2010-11 Net
Continuation Supported Supported Net Approved Position
Function Appropriation Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
DOT Administration 86,354,752 (3,335,662) (1,757,817) (6.00) 636,000 - - (4,457,479 81,897,273 (6.00)
Division of Highways
Administration 34,963,043 (1,369,863) (600,003) (16.00) - - - (1,969,866 32,993,177 (16.00)
Construction 121,214,183 (2,660,000) - - 12,086,368 - - 9,426,368 130,640,551 -
Maintenance 897,149,144 (57,139,505) (52,345,047) - - - - (109,484,552 787,664,592 -
Planning and Research 4,055,402 - - - - - - 4,055,402 -
OSHA Program 425,000 (52,208) (17,403) - - - (69,611) 355,389 -
Ferry Operations 28,765,439 (2,155,497) - - 3,116,267 384,000 79.00 1,344,770 30,110,209 79.00
State Aid
Municipalities 83,214,183 - - - 2,986,368 - 2,986,368 86,200,551 -
Public Transportation 96,544,229 (16,426,078) (8,486,189) - - (24,912,267 71,631,962 -
Airports 19,291,543 (1,125,523) (874,477) - - (2,000,000 17,291,543 -
Railroads 17,101,153 - - - - - 17,101,153 -
Governor's Highway Safety Program 352,325 - - - - - 352,325 -
Division of Motor Vehicles 105,732,881 (2,083,008) (2,166,603) - 264,359 - 4.00 (3,985,252 101,747,629 4.00
Other State Agencies 299,106,995 (7,910,922) (3,149,652) - 810,000 - (10,250,574 288,856,421 -
Reserves and Transfers 4,222,758 (8,260,935) - - 11,600,000 - - 3,339,065 7,561,823 -
Capital Improvements - -
Total Highway Fund 1,798,493,030 (102,519,201) (69,397,191) (22.00) 31,499,362 384,000 83.00 (140,033,030) 1,658,460,000 61.00
Administration 50,652,480 (8,278,560) - - - - - (8,278,560 42,373,920 -
Construction
Intrastate System 471,440,180 (101,984,625) - - - - - (101,984,625 369,455,555 -
Urban Loop System 159,678,513 (41,238,334) - - - - - (41,238,334 118,440,179 -
Secondary Roads 71,231,921 (10,700,566) - - - - - (10,700,566 60,531,355 -
State Aid to Munipalities 52,250,080 (10,700,565) - - - - - (10,700,565 41,549,515 -
-
Bonds -
Bond Redemption 54,030,000 - - - - - - - 54,030,000
Bond Interest 25,962,750 - - - - - - - 25,962,750-
NC Turnpike Authority 99,000,000 - - - - - - - 99,000,000
Transfer to the General Fund 73,214,076 (367,350) - - - - - (367,350) 72,846,726 -
Total Highway Trust Fund 1,057,460,000 (173,270,000) - - - - - (173,270,000) 884,190,000 -
11
Table 6
Recommended General Fund Availability and Appropriations, 2009-11
2009-10 2010-11
Description Recommended Recommended
Revenue:
Tax:
Income (Individual & Corporate) $ 1 1,184,700,000 $ 1 1,794,900,000
Sales and Use 5 ,038,400,000 5 ,400,300,000
Other Tax 2 ,353,500,000 2 ,571,900,000
Total Tax 1 8,576,600,000 1 9,767,100,000
Nontax 7 39,234,764 7 52,653,080
Transfers 1 26,100,000 9 1,100,000
Total Revenue 19,441,934,764 2 0,610,853,080
Federal Recovery Funds:
FMAP Assistance 1 ,003,677,475 5 00,711,010
Fiscal Stabilization -- Education 5 80,966,000 5 80,966,000
Fiscal Stabilization -- General Purpose 1 29,261,500 1 29,261,500
Subtotal Federal Recovery Funds 1 ,713,904,975 1 ,210,938,510
Total Availability 21,155,839,739 2 1,821,791,590
Appropriations:
Recommended Continuation Budget 2 2,113,897,166 2 2,814,943,571
Recommended Budget Reductions (1,302,313,973) (1,288,726,899)
Recommended Expansion Budget 1 69,533,021 1 22,862,646
Total Recommended Appropriations 2 0,981,116,215 2 1,649,079,318
Total Ending Balance 174,723,525 1 72,712,272
Transfer Funds to Fiscal Responsibility Reserve (174,723,525) -
Remaining Balance $ - $ 1 72,712,272
16
12
Table 7
Recommended Highway Fund Availability and Appropriations
2009-11
2009-10 2010-11
Recommended Recommended
Availability
Beginning Credit Balance:
Unappropriated Balance from FY 2008-09 $ - $ -
Anticipated Reversions from FY 2008-09 - -
Anticipated Overcollections from FY 2008-09 - -
Anticipated Beginning Unreserved Credit Balance - -
Recommended Budgeted Revenue:
Tax Revenue 1,075,140,000 1 ,038,470,000
Non-tax Revenue 6 08,360,000 6 19,990,000
Total Highway Fund Revenue 1 ,683,500,000 1 ,658,460,000
Total Availability 1 ,683,500,000 1 ,658,460,000
Recommended Appropriations:
Original Certified Budget 1 ,798,936,717 1 ,798,493,030
Recommended Reductions (140,463,523) (171,916,392)
Recommended Expansion 2 5,026,806 3 1,883,362
Total Appropriations Recommended 1 ,683,500,000 1 ,658,460,000
Total Ending Balance $ - $ -
13
Table 8
Recommended Highway Trust Fund Availability and Appropriations
2009-11
2009-10 2010-11
Recommended Recommended
Availability
Beginning Credit Balance:
Unappropriated Balance from FY 2008-09 $ - $ -
Anticipated Reversions from FY 2008-09 - -
Anticipated Overcollections from FY 2008-09 - -
Anticipated Beginning Unreserved Credit Balance - -
Recommended Budgeted Revenue:
Tax Revenue 7 64,740,000 7 89,500,000
Non-tax Revenue 9 2,750,000 9 4,690,000
Total Highway Trust Fund Revenue 8 57,490,000 8 84,190,000
Total Availability 8 57,490,000 8 84,190,000
Recommended Appropriations:
Original Certified Budget 1 ,014,750,000 1 ,057,460,000
Recommended Reductions (157,260,000) (173,270,000)
Recommended Expansion - -
Total Appropriations Recommended 857,490,000 884,190,000
Total Ending Balance $ - $ -
15
Major Expansion Budget
Recommendations
Fiscal Responsibility
Education
General Government
Health and Human Services
Economic Development and Infrastructure
Justice and Public Safety
Natural and Economic Resources
Transportation
Capital Improvements
Teachers and State Employees
17
•• It provides $1 million to upgrade the state
web portal and accountability websites to
make government services more accessible
and customer-friendly to the public.
•• In this tough environment, the budget appro-priates
$2.3 million for the Office of Economic
Recovery and Investment to ensure North
Carolina maximizes the use of available federal
recovery funds.
Requires us to live within our means
•• This budget reduces the total General Fund
budget (including federal recovery monies)
by $360 million or 1.8%, even after taking over
local Medicaid expenses.
•• Spending in this budget is 3.2% less per capita
than in FY 2008-09.
•• The state takes on no additional indebtedness
in FY 2009-10.
Governor Perdue recommends a balanced and
reasoned budget that:
Makes government more effective and efficient
•• This budget identifies $2.6 billion in General
Fund budget reductions ($1.3 billion each fis-cal
year).
•• It looks for savings by focusing on reducing or
eliminating duplicative, costly, inefficient or
nonessential programs and services.
•• This year’s budget development process tran-sitions
from our current incremental budget-ing
approach to one that focuses more on
results.
Provides transparency and accountability
•• This budget invests $4.25 million to create
and maintain a budget and performance man-agement
system.
Fiscal Responsibility
Major Recommendations
18
Figure 2
Average Daily Membership Budgeted
NC Public Schools
1,150,000
1,200,000
1,250,000
1,300,000
1,350,000
1,400,000
1,450,000
1,500,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Percent Change
ADM Percent Change
Education
Major Recommendations
•• Appropriate $6.7 million to continue the drop-out
prevention grant initiative, which address-es
issues such as truancy, academic failure, and
school transition.
•• Increase funding for the statewide program
that provides tailored and sustained support
to struggling schools and districts to improve
student achievement.
•• Provide full funding for additional 12 Learn
and Earn schools scheduled to open in the
2009-10 school year in order to improve
graduation rates, student performance, and
competitiveness.
•• Provide an LEA flexibility reduction to be allo-cated
based upon average daily membership.
This reduction shall not directly impact class-room
services and LEAs are strongly encour-aged
to use funds received from the federal
recovery act to mitigate this reduction.
Public Education
Governor Perdue’s budget protects K-12 with total
public education spending (including federal
recovery dollars) greater in 2009-10 than 2008-09,
even though enrollment is expected to be lower
by 0.79%. Major budget recommendations are
listed below:
•• Provide $4.7 million to investigate and pilot
diagnostic assessments in the elementary
grades to ensure that basic deficiencies in
reading and math are addressed before stu-dents
move to middle school, to replace the
standard course of study with a 21st century
curriculum, to develop a plan to restruc-ture
the ABCs Accountability System, and to
replace the current end of grade and end of
course with assessments aligned with the new
curriculum and using nationally normed as-sessments
wherever possible.
See left axis for bars, right for line.
Source: Departmemt of Public Instruction, Financial and Business Services School allotment section.
Average Daily Membershil is the number of days in membership for all students divided by the number of school
days in a particular term (school month or school year).
19
Figure 3
Enrollment in Community College System
Curriculum, Continuing Education, Basic Skills
Budgeted FTE
0
50,000
100,000
150,000
200,000
250,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
0%
2%
4%
6%
8%
10%
12%
Percent Change
FTE Percent Change
Provide $3 million to fund 20 grants to colleges
for programs serving areas of major need
in technical fields, including transportation,
engineering, industrial, military, construction,
and green technology sectors.
Appropriate $2.5 million from the American
Recovery and Reinvestment Act to
implement JobSupport to meet the child care,
tuition, and transportation needs of displaced
workers while they pursue retraining.
•• Approve a recurring $5 million to address
equipment and technology needs at the
colleges to reduce program waiting lists and
meet the training needs.
•• Appropriate an enrollment growth reserve of
$3 million to assist community colleges expe-riencing
an anticipated enrollment growth of
5% or more above the prior year.
•• Provide a community college flexibility reduc-tion.
The reductions shall not directly impact
retraining for displaced workers or course of-ferings
to high school students.
•• Adjust the budget for NCCCS Office salaries
to 97% and college salaries to 98%, to more
closely match the actual salary expenditures.
•• Adjust the budget for DPI salaries and LEA
benefits to 97% to more closely match the
actual salary and benefit expenditures.
•• Reduce funding for textbooks on a nonrecur-ring
basis due to a delay in the middle and
high school math textbook adoption. LEAs
will continue to have funds available to pur-chase
the remaining textbooks.
•• Adjust the financing for school bus replace-ment
from three years to four years, saving
$7.5 million annually. This will not reduce the
number of buses scheduled for replacement
over the biennium.
Community Colleges
The Governor’s community college budget
focuses on strategic areas to ensure workforce
development and create jobs for the future. Total
funding for the NCCCS is greater in 2009-10 than in
2008-09. Major budget recommendations include:
•• JobsNOW:
Appropriate $4.8 million to provide 65
additional health faculty targeted in areas
with a high shortage and a waiting list of
students.
Source: NCCCS System Office
Budgeted FTE (full time equivalent enrollment) is the sum of curriculum, continuing education, and basic skills FTE. It is computed as
the three-year average or the prior year’s enrollment for each college, whichever is higher. The community colleges’ enrollments are
aggregated for the entire Community College System. (The three-year average creates slight differences between budgeted and actual
FTE; recently, this systemwide difference has been less that 100.)
20
School of Medicine’s ability to provide care for
the indigent patients of eastern North Caro-lina.
•• Provide a UNC GA flexibility reduction of
approximately 5% for most of UNC GA. The
UNC System President and the UNC Board of
Governors have the flexibility to implement
this reduction.
•• Provide a UNC campus flexibility reduction
of approximately 3.6%. The campuses will
use this flexibility to make reductions in areas
based upon the best interests of each campus.
•• Adjust the budget for UNC GA salaries to 97%
and UNC campus salaries to 98%, to more
closely match the actual salary expenditures.
•• Reduce UNC Hospitals transfer for 2 years due
to their large fund balance.
•• Reduce the Legislative Tuition Grant budget
consistent with the reduction for the UNC
campuses. The need-based financial aid pro-gram
for private colleges, the State Contrac-tual
Scholarship Fund, is held harmless.
•• Reduce supplemental multi-campus funding
by approximately 12.8%. Colleges will con-tinue
to receive FTE funding for enrollment
generated at these sites.
•• Restructure continuing education fee rates to
a new sliding scale based upon length of each
course. Fee increases will not reduce access to
training for dislocated workers.
University System
The Governor’s budget continues to provide
university access for North Carolinians at a cost
that is reasonable and affordable by fully funding
enrollment growth and need-based financial aid,
while not recommending an increase in tuition.
Highlights of the budget recommendations are
listed below.
•• Provide full funding for the UNC Need-Based
Financial Aid request of $23.4 million to con-tinue
the expansion of this UNC grant program
to ensure that all eligible students shall receive
a grant and will hold recipients harmless from
the increases in the cost of education.
•• Approve $4 million to support the ECU Brody
Source: UNC General Administration
Budget FTE is calculated by converting budgeted student credit hours (fall and spring) into the measure of regular
term full time equivalent students (FTEs).
Figure 4
Enrollment in the University System
Budgeted FTE
0
50,000
100,000
150,000
200,000
250,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Percent Change
Enrollment Units (FTE) Percent Change
21
Sustaining Services for State Government
Operations
•• Restore funding for the State Parking System
to ensure parking services are maintained in
the downtown State Government Complex,
and add $1.2 million to support recurring
resources needed to stabilize the HR/Payroll
system.
Preserving Core Agency Functions
•• Ensure that core agency functions are main-tained
by limiting reductions primarily to
operating efficiencies and payroll reductions
that reflect actual expenditure needs.
Governor Perdue’s General Government budget
includes:
Supporting Our Military Members
•• Sustain the $1 million funding for military mo-rale
and welfare grants to military installations.
These grants fund community service and
quality of life programs for military members
and their families in North Carolina.
Ensuring Justice for Sterilization Victims
•• Allocate $250,000 to begin planning efforts
for the establishment of a foundation that will
provide justice and compensate those who
were forcibly sterilized by the state.
General Government
Major Recommendations
22
providing them with a medical home and
coordinating the receipt of free or low cost
health care services through Community
Care of North Carolina (CCNC), hospitals,
local health departments, and locally based
indigent care programs.
Supporting older adults and the families who
care for them. Specific initiatives include:
•• Additional funds ($1 million) in the Home
and Community Care Block Grant Program
(HCCBG) targeted at removing people on the
waiting list for in-home personal care. The
Governor’s budget also restores the avail-ability
of the $2 million that were appropri-ated
by the General Assembly during the
2008 Session but not allocated in the current
The Governor’s proposed budget for health and
human services targets scarce expansion funding
to protect and assist our State’s most vulnerable
populations. Her priorities include:
Increasing access to health care for working
families and the uninsured. Initiatives include:
•• Expand enrollment in the State Children’s
Health Insurance Program (SCHIP) over the
biennium to approximately 16,000 additional
children from families making under 200% of
the federal poverty level. Enrollment is pro-jected
to be 153,755 children at the end of
June 2011.
•• Provide additional funds ($950,000) for Health
Net, a care management program that assists
low income, uninsured North Carolinians by
Health and Human Services
Major Recommendations
Source for Expenditures: BD701 Budget Reports, Budget Code 14445, Fund 1310
Source for Eligibility: Medicaid Eligibility Report EJA752 - SFY 2007
Figure 5
North Carolina Medicaid Expenditures
Eligible Residents
-
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
2003-04 2004-05 2005-06 2006-07 2007-08
1,400,000
1,450,000
1,500,000
1,550,000
1,600,000
1,650,000
1,700,000
1,750,000
Medicaid Eligible NC Residents
Expenditures Eligibility
23
fiscal year due to the budget shortfall. These
additional funds can be used to further reduce
the waiting list for all HCCBG services, includ-ing
home-delivered meals, congregate meals,
in-home personal care, respite care, adult care
services, and transportation.
•• Recurring funds of $500,000 for Project
C.A.R.E., a nationally recognized consumer-directed
respite care program that provides
comprehensive support to caregivers of
persons with dementia. Further support for
families caring for a person with dementia is
provided through a proposed caregiver tax
credit.
Improving institutional and community-based
resources that provide services to the mentally
ill. Initiatives include:
•• An additional $12 million to continue the
investment in the local crisis services system
by purchasing 111 local inpatient psychiatric
hospital beds. Local inpatient care affords cli-ents
opportunities to receive services in their
home community, allowing better integration
of care; and allowing state psychiatric hospi-tals
to begin focusing their mission on long
term care.
•• Funds to enhance training for employees at
state facilities to improve the quality of care
provided to clients and to expand the Psychi-atric
Nurse Practitioner Program.
•• Additional funds of approximately $30 million
in the continuation budget to shore up line-items
that have been historically underbud-geted
in the Division of Mental Health, Devel-opmental
Disabilities, and Substance Abuse.
The Governor’s proposed budget for health and
human services also requires reductions totaling
$274 million. Over 85% of the department’s bud-get
is spent on aid and public assistance, making it
impossible for this reduction not to affect pro-grams
and services delivered to our state’s citizens.
However, every attempt was made to minimize
the impact on our neediest residents and to target
programs where reductions would not impact
service levels. Agencies were asked to work more
efficiently to minimize the impact of operating
budget reductions, and use federal funds to re-place
state funds wherever possible.
Major reductions include:
•• $101 million from freezing the provider infla-tionary
increase in the Medicaid budget .
•• $22.5 million from budgeting salaries at less
than 100%.
•• $20.8 million from reducing prescription drug
costs in Medicaid.
24
•• Approve $5 million for evidence-based grants
that focus on gang prevention, treatment,
intervention, and re-entry programs.
•• Provide $1.5 million for additional Juvenile
Court Counselors to ensure the effective su-pervision
of adjudicated youth.
Enhancing supervision of offenders
•• Add $2.4 million each year to improve re-cruitment
and retention of Probation/Parole
Officers.
•• Appropriate $8.8 million for FY 2009-10 and
$10.6 million for FY 2010-11 for additional Pro-bation/
Parole Officers, supervisors, and train-ers
to enhance the Department of Correction’s
ability to meet current offender supervision
needs through adequate staffing and reduced
span of control.
The Governor’s proposed budget includes the
following recommendations in Justice and Public
Safety:
Addressing gangs comprehensively through
Federal Recovery Funds
•• Allocate $200,000 each year to establish a
statewide gang task force to develop a com-prehensive
plan and ensure a well-coordinat-ed
statewide enforcement program.
•• Provide $1.8 million to expand the GangNet
intelligence information database to link the
entire state.
•• Allocate $6 million for a Gang Prevention and
Intervention Pilot Program that will focus on
youth at-risk for gang involvement and those
who are already associated with gangs and
gang activity.
Justice and Public Safety
Major Recommendations
25
Maximizing Resources for Infrastructure
Improvements
•• Add $10 million to enable local governments
to leverage loans made available through
federal recovery funding for water and sewer
infrastructure projects.
•• Allocate $9.5 million in state appropriation
each year to leverage $95 million in federal
funding that will provide low-interest loans for
water supply and wastewater infrastructure
improvements.
Restructuring Agency Functions
•• Save $377,000 by eliminating the Office of
Environmental Education and transferring the
curriculum development functions to various
education agencies.
•• Save $200,000 by eliminating dedicated fund-ing
for the Neuse River Rapid Response Team,
instead utilizing existing resources across the
state to implement this function statewide.
Promoting Our State
•• Invest $2 million to promote North Carolina
as a business destination, expand the tourism
and film industry, and market North Carolina
grown products.
The Governor recommends the following
adjustments for this bienium:
Fostering and Supporting Community Growth
Strategies
•• Appropriate $3.3 million each year to trans-form
the Main Street Program into a more
comprehensive economic development tool,
and drive regional job creation through the
development of growth plans and awarding of
grants for customized local projects in “micro-politan”
communities.
•• Provide $3.2 million each year to restore fund-ing
for the Regional Economic Development
Commissions so they can continue to promote
economic development and tourism in the
communities they serve throughout North
Carolina.
Growing North Carolina Businesses and Jobs
•• Appropriate $3.75 million to increase the com-petitive
position of small businesses, strength-en
economic development opportunities for
the homeland security and national defense
industries, and expand growth of North
Carolina’s aerospace industry. In addition, $5
million in federal recovery funds will support
efforts to encourage the development of and
investment in green technologies in the state.
Natural and Economic Resources
Major Recommendations
26
•• Invest $5.3 million and $8.8 million, respec-tively,
for each year of the biennium in receipt
funds for information technology projects that
will facilitate combined motor vehicle registra-tion
and collection of county property taxes by
the Division of Motor Vehicles.
•• Dedicate $1.5 billion or 43% of total program
resources each year of the biennium for con-struction
related activities. Reductions of $200
million (12%) in 2009-10 and $178 million
(10%) in 2010-11 over the 2008-09 authorized
level are recommended.
•• Provide $819 million (23%) in 2009-10 and
$787 million (22%) in 2010-11 of total program
resources for highway maintenance activities
throughout the state. Reduced appropriations
in the amount of $125 million (13%) in 2009-
10 and $156 million (17%) in 2010-11 over the
2008-09 authorized level are recommended.
•• Provide $156 million in 2009-10 and $167 mil-lion
in 2010-11 for multi-modal transportation
activities throughout the state that include
public transportation, aviation, and rail pro-grams.
Program reductions of $7.8 million
or 7% are recommended for each year of the
biennium over the 2008-09 authorized level.
•• Approve $127 million in funding each year of
the biennium for state aid to municipalities
(Powell Bill) for improvements to the municipal
street system. Reductions in the amount of
$20 million or 14% are recommended for each
year of the biennium to adjust appropriations
as statutorily required.
Governor Perdue is extremely committed to in-vesting
funds in infrastructure projects to facilitate
economic growth. Restoring and maintaining the
state’s transportation infrastructure and promot-ing
public transit initiatives are key components.
Total funding of $3.6 billion is recommended in
support of North Carolina’s Transportation Pro-gram
for each year of the 2009-11 biennium. Over
70% of the funding is recommended for construc-tion,
maintenance, and public transportation
activities throughout the state.
The governor’s budget recommendations also
include funds for initiatives aimed at making gov-ernment
operate more effectively and efficiently
through investment in information technology
projects that streamline program operations.
Two of the major sources of revenue (motor fuel
tax and highway use tax) that support the trans-portation
program have been severely impacted
by the current economic slowdown. As a result,
many programs will face reductions in appropria-tions
for the biennium. The reductions are re-quired
to align appropriations with the estimated
revenues that support the program.
Figures 7 - 10 show the distribution of funding
sources and appropriations for North Carolina‘s
Transportation Program for both years of the bien-nium.
Major Transportation Program Recommenda-tions:
•• Provide $64 million in 2009-10 and $99 million
in 2010-11 for GAP funding for NC Turnpike
Authority projects authorized by the General
Assembly by continuing the reduction of the
annual transfer from the Highway Trust Fund
to the General Fund.
Transportation
Major Recommendations
27
She anticipates that approximately 14,000 jobs will
be created throughout the state as a result of the
federal economic recovery funds.
Seventy “shovel-ready” projects totaling $466 mil-lion
have been identified across the state utilizing
the first half of available funding for highways and
bridges. Projects that will be funded from the
remaining funds for highways and bridges and
transit funds are currently being identified and
should be completed soon.
Projects selected for funding have been and will
continue to be strategically selected to represent
geographical diversity and broad scope, and will
benefit a wide range and size of partners in the
transportation industry.
Impact of Federal Economic Recovery Funds on
NC’s Transportation Program
The Economic Recovery and Reinvestment Act was
signed into law on February 17, 2009. The primary
focus of the plan is the preservation and creation
of jobs. The package approved by Congress pro-vides
$47.8 billion for Transportation.
North Carolina’s expected share of highway and
bridge funding is $735 million to be distributed
by the state equity formula, and $103 million in
transit federal formula grants. Fifty percent (50%)
of available funds are required to be obligated by
states within 120 days, and the remainder within
one year of enactment.
Governor Perdue is already beginning to put the
federal recovery funds to work in North Carolina
to help create jobs and stimulate local economies.
Figure 6
Funding Sources
North Carolina Transportation Program
2009-10
Highway Fund
46.9%
Highway Trust Fund
23.9%
Department Receipts
1.1%
Federal Funds
28.2%
28
Figure 7
Funding Sources
North Carolina Transportation Program
2010-11
Highway Fund
46.0%
Highway Trust Fund
24.5%
Department Receipts
1.2%
Federal Funds
28.3%
Figure 8
Appropriations
North Carolina Transportation Program
2009-10
Construction
43%
State Aid
8%
Ferry Operations
1%
Other Programs
0%
Reserves
0%
Debt Service
4%
Agency
Administration
4%
Division of
Motor Vehicles
4%
NC Turnpike
Authority
2%
Transfers to Other
State Agencies
11%
Maintenance
23%
29
Figure 9
Appropriations
North Carolina Transportation Program
2010-11
Transfers to Other
State Agencies
10%
NC Turnpike
Authority
3%
Agency
Administration
4%
Division of
Motor Vehicles
4%
Debt Service
3%
Reserves
0%
Other Programs
0%
Ferry Operations
1%
State Aid
8%
Maintenance
22%
Construction
45%
30
Education
•• Provides $10 million in appropriations for
the UNC-CH Biomedical Research Imaging
Center for 2009-10. A total of $20.5 million
has been previously funded. An additional
$229.5 million will be needed to fund later
phases of the project which are scheduled
for completion in 2013. The governor intends
to finance the completion of the project us-ing
bonded indebtedness beginning in FY
2010-11. Repayment of debt will be shared
with 15% from UNC-Chapel Hill, 15% from
UNC Hospitals, and 70% from the General
Fund.
Natural and Economic Resources
•• Appropriates $17.6 million for the state’s
share of civil works projects for navigation,
flood control, drainage, and beach protec-tion.
The costs of these projects are shared
by federal and/or local governments using
a statutory formula. Total project costs are
$100.7 million, including $83.1 million from
federal/local matching funds.
Governor Perdue recommends a minimal capital
financing package, limited by the current, severe
economic recession. The proposed capital
budget includes $27.6 million from General
Fund appropriations with $83.1 million from
federal/local matching funds. No appropriation
is recommended for the Repair and Renovation
Reserve. Debt financing is not recommended
for 2009-10. The 2009 Debt Affordability Study
indicates a very limited capacity for the state to
issue new debt and stay within accepted debt
service limitations. In addition, the level of future
revenues is uncertain.
Background – The 2008-09 CI Budget
The Appropriations Act of 2008 included
$69,839,238 for the Repair and Renovation
Reserve, $129,082,062 for appropriated (pay-as-you-
go) projects, $750,463,944 of Special Indebt-edness
projects, and $107,000,000 of General
Obligation Bonds (the Two-Thirds Bond Act of
2008) for a total of $1,056,385,244. In response
to lower revenues, $175,850,370 was withheld
from appropriated projects and from the Repair
and Renovation Reserve.
Capital Improvements
Major Recommendations
Figure 10
Authorized/Proposed Capital Funds
$27.6
$1,044.9 $1,056.4
$1,147.7
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2006-07 2007-08 2008-09 2009-10 Proposed
Millions
Withheld or Delayed
GO Bonds
Special Financing
R&R Reserve Account
Appropriations
31
savings of $17 million per year of the bien-nium
and will not affect any employee who is
covered by the State Health Plan.
•• Freeze teacher and state employee longevity
payments for two years, saving about $170
million per year of the biennium. Teachers’
and state employees’ final retirement calcula-tions
will be held harmless from this longev-ity
reduction. State employees who are not
on the Teacher Salary Schedule will receive
bonus leave for each year of the biennium in
lieu of longevity payments. The amount of
bonus leave is commensurate to the employ-ee’s
years of service in state government.
Teachers and State Employees
•• Allocate approximately $125 million in the
first year and $228 million in the second year
of the biennium to the State Health Plan
to support an approximate 7.4% per year
increase in employer-paid premiums.
•• Allocate $21 million in each year of the bien-nium
to the Retirement System to maintain
the system’s actuarially sound status.
•• Provide employer-paid funds for health care
premiums at actual costs, rather than on a
per-employee basis because many state em-ployees
choose not to participate in the State
Health Plan. This reduction will generate a
Teachers and State Employees
Major Recommendations
33
Economy and Revenue
Economy
Outlook for the Nation and State
Revenue
General Fund Revenue Forecast
Highway Fund Revenue
Highway Trust Fund Revenue
35
values, consumers have cut back spending consid-erably.
Real consumer spending fell 3.5% in the 4th
quarter of 2008, following a decline of 3.8% in the
3rd quarter. Going forward, falling energy prices
and the fiscal stimulus are expected to boost dis-posable
income.
North Carolina’s economy reflects
national conditions
After 3 consecutive years of greater than 2.0%
job growth, North Carolina’s labor market slowed
significantly over the past year. In 2008, total
nonfarm payrolls were down 120,200 jobs or 2.9%
compared to a year ago. The sharp slowdown in
recent months has particularly impacted North
Carolina. The unemployment rate reflects these
job losses as it soared to 9.7% in January 2009.
Education and Health employment prop up
service sector. The education and health services
category was the only service sector to register
positive growth in 2008. Specifically, education
and health gained 18,100 jobs over the past
year, while the other service sectors experienced
broad declines. Professional and business
services suffered significant losses (39,800) after
consecutive years of strong growth. Leisure and
hospitality services also posted a slight decline
(2,100).
Manufacturing losses increase. After a brief
improvement in 2005 and 2006, the rate of job
losses in the manufacturing sector has accelerated
over the past 2 years. As of December 2008,
manufacturing employment was down 7.4%
compared to the previous year. Faced with
increasing competition from overseas, the textiles,
apparel, and furniture industries continue to suffer
the largest job losses.
Review of Current Fiscal Year
The recession deepens
The U.S. economic struggles continued in earnest
this year, as recessionary conditions worsened
in the second half of 2008. Job losses mounted
and the unemployment rate increased rapidly.
Cheaper energy prices and tax cuts did not
outweigh significant headwinds facing consumers
as spending declined. Continued deterioration
in the housing market also contributed to the
economic decline.
Real Gross Domestic Product (GDP) declining
sharply during 2008-09. The value of all goods
and services produced within the U.S., adjusted for
inflation, dropped 3.8% in the 4th quarter of 2008.
The economy is expected to contract further in the
1st quarter of 2009.
Job losses are accelerating. The cumulative job
loss since the employment peak in December 2007
has grown to 3.57 million. Employment losses
totaled 1.24 million in the 4th quarter of 2008
and are expected to get worse in the 1st quarter
of 2009. The job losses have been apparent in
almost all sectors, with only health and education
services and government showing any gains. The
unemployment rate started 2008 at 4.9%, but has
climbed to 7.6%.
Housing remains a drag on growth. The housing
downturn continues as total housing starts and
total housing permits have reached all-time lows.
While mortgage rates have fallen to 5.0% levels,
the benefits appear related to refinancing as
opposed to home purchases.
Consumers retrenched. With job losses, tighter
credit conditions, and declining home and stock
Economy
Outlook for the Nation and State
36
•• Housing starts are expected to hit bottom in
the 1st half of 2009 and rebound in 2010 and
2011. Prices will continue to fall in 2009 and
2010 as inventory levels remain high.
•• Even with a boost from the fiscal stimulus, con-sumer
spending is expected to decline 1.0%
in 2009, the sharpest drop since 1942. Modest
spending growth is expected to return in 2010
and 2011.
•• Firms have few reasons to start new buildings
or renovate existing ones. Total nonresidential
construction is projected to fall 16.6% in 2009
and 15.8% in 2010. As the business outlook
improves, nonresidential investment returns to
positive growth in 2011.
North Carolina’s economy expected
to improve in 2010 and 2011
Similar to expectations for the national economy,
a stagnant North Carolina economy is expected
in 2009. Large job declines in the manufacturing
and construction sectors will be significant drags
on economic growth. The economy begins to
recover in 2010 as manufacturing losses stabilize,
construction rebounds, and the service sector
remains a solid source of growth. Highlights of
projections for North Carolina’s economy include:
•• Despite a significant deceleration in personal
income growth, the state is likely to outpace
the U.S. in 2009, 2010, and 2011 (see figure 11).
•• Employment is expected to fall 3.0% in 2009,
about the same as the projected U.S. decline.
Nonfarm employment is forecast to expand
0.5% and 1.9% in 2010 and 2011, respectively.
•• Reflecting the employment slowdown, the
unemployment rate is projected to peak just
below 10.0% in 2010 before falling to the 9.0%
level in 2011.
•• Employment gains will be led by the educa-tion
and health services sector, which is pro-jected
to average 2.5% growth over the next
several years.
Housing weakness impacts North Carolina.
Since North Carolina did not have the run-up in
housing prices that occurred in many other parts
of the country, it has avoided some of the hous-ing
market’s troubles and affordability problems.
However, the state has not been immune. Hous-ing
starts have dropped more than 35% over the
year, causing construction job growth to deceler-ate
significantly. Construction posted a significant
7.0% decline compared to the past year. Home
prices remain positive, but only marginally.
Outlook for the Remainder of
2009 and for 2010 and 2011
U.S. economy improves in 2010
and 2011
The U.S. economy continues to struggle for
the remainder of 2009 as job losses swell and
consumers pull back. The fiscal recovery package
and other policy measures will help stabilize the
economy in later 2009, with employers starting to
add jobs again in early 2010. A mild rebound is
expected in 2010 followed by improved growth in
2011. Highlights of the economic outlook include:
•• Real GDP is expected to decline sharply
through the first 2 quarters before stabiliz-ing
in the second half of 2009. In total, the
economy is projected to contract 2.7% in 2009.
Growth is expected to be 2.0% in 2010 fol-lowed
by 3.5% in 2011.
•• Nonfarm payrolls are expected to continue
declines in 2009 before rebounding modestly
in 2010 and 2011. The unemployment rate is
projected to peak near 9.4% in early 2010 and
fall to 8.7% in 2011.
•• Inflation is expected to fall 1.9% in 2009, the
first yearly decline since 1955. As consumer
demand slowly returns, prices are expected to
increase 1.7% in 2010 and 2.2% in 2011. Core
inflation, which excludes food and energy, is
expected to remain positive in 2009 and stay
under 2.0% through 2011.
37
•• North Carolina’s manufacturing employment
losses are expected to accelerate in 2009 be-fore
stabilizing in 2010 and 2011. Since the
beginning of the 2001 national recession, the
state has lost 232,200 (31.9%) manufacturing
jobs.
•• Housing starts are projected to fall 33.1%
in 2009 before bouncing back with solid
growth in 2010 and 2011.
•• After a significant decline in 2009, the
professional and business services sector is
expected to register solid job growth in 2010
and 2011.
•• Construction employment is likely to expe-rience
significant job losses over the next
several years as construction activity has
fallen dramatically. Specifically, construction
employment is projected to decline 11.3% in
2009 and 7.0% in 2010 before finally realizing
small job gains in 2011.
Figure 11
NC Income Expected to Exceed US
Percentage Growth in Personal Income
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
NC US
38
For each of the major categories of general fund
revenue, the current performance and fiscal
year 2009-10 and 2010-11 baseline forecasts are
discussed below, along with any recommended
tax changes.
Individual income taxes
Net individual income tax receipts totaled $6,152.0
million through the first 7 months of fiscal year
2008-09, about $403.2 million below the official
estimate. For 2008-09, a 5.0% decline is expected
over the previous fiscal year.
Significant job losses and income declines
have fueled this decreases. In particular, the
rate of manufacturing losses has accelerated
again. In addition, the professional and business
services and construction sectors have retracted
significantly. Wages are likely to register minimal
to no growth while nonwage income has
plummeted.
As the economy begins to recover in late 2009
and early 2010, North Carolina’s employment
and wages are expected to slightly improve. This
recovery is expected to gain momentum in 2010-
11. Reflecting this outlook, baseline individual
income tax collections are expected to grow only
0.3% in 2009-10 and 5.2% in 2010-11.
Sales and use taxes
While lower energy prices and tax cuts provided
some support to consumer spending, the impact
has been outweighed by job losses, a tight
credit market, and reduced home and stock
values. Reflecting this decline, sales and use
tax collections are significantly below forecast
through the first 7 months of 2008-09. For 2008-
09, sales and use collections of $4,793.1 million
are expected, a 3.8% decline compared to the
About half of North Carolina’s total revenue
originates from tax collections and other sources
comprising the General Fund. The other half
consists of funds from the federal government,
highway funds, the Education Lottery, and other
receipts and fees (e.g., tuition).
General Fund revenues are primarily derived from
three sources: individual income tax, corporate
income tax, and the sales and use tax. Other
important sources include franchise, insurance,
alcohol, and other miscellaneous taxes. In
addition, nontax revenue, such as earnings from
investment of state funds, supports the General
Fund (see Table 9).
General Fund Revenue Reflects
Sluggish Economy
Similar to many other states, the financial
sector problems and rapid decline in economic
conditions have led to historic revenue declines
in North Carolina. Through the first 7 months of
2008-09, total General Fund revenue collections
(including nontax receipts and transfers) are
$991.3 million or 8.6% below expectations. By
the end of 2008-09, it is currently projected
that General Fund revenue collections will total
$18,648.4 million, $2,201.3 million below the
budgeted forecast.
Reflecting a sluggish economy, baseline General
Fund revenue is expected to grow only by 0.1%
in 2009-10. As the economy improves in 2010-
11, baseline General Fund revenue is expected
to rebound to 5.4% growth in 2010-11. Table
10 details these forecasts, adjusted for the
recommended tax changes discussed below. It
also shows the projected and budgeted general
fund revenue for fiscal year 2008-09. Figure 13
shows the distribution of General Fund revenue
estimates for 2009-10.
Revenue
General Fund Forecast
39
2008-09 2008-09 2009-10 2010-11
Budgeted Revised Estimated Estimated
Tax Revenue
Individual Income $ 11,386.2 $ 10,356.1 $ 10,399.7 $ 10,959.3
Sales and Use 5,374.3 4,793.1 5,038.4 5,400.3
Corporate Income 1,191.5 767.6 785.0 837.2
Franchise 587.0 607.2 618.7 646.6
Insurance 522.2 508.4 520.6 535.6
Tobacco Products 236.2 232.6 559.0 668.9
Beverage 233.8 230.4 392.2 449.0
Inheritance 161.7 119.5 129.3 134.5
Licenses 56.0 42.4 61.7 63.3
Mill Machinery 38.3 32.9 33.9 34.9
Piped Natural Gas 35.7 37.2 38.1 39.1
Gift 16.5 16.5 0.0 0.0
Miscellaneous 0.0 0.0 0.0 0.0
Total Tax Revenue $ 19,839.4 $ 17,743.9 $ 18,576.6 $ 19,768.7
Nontax Revenue
Investment Income 248.1 158.0 136.4 153.8
Judicial Fees 204.8 193.5 208.6 219.4
Disproportionate Share Receipts 100.0 100.0 125.0 100.0
Insurance Department 228.8 217.4 195.7 201.5
Miscellaneous 63.5 70.5 73.6 78.0
Total Nontax Revenue $ 845.2 $ 739.4 $ 739.2 $ 752.7
Transfers
Highway Fund 147.5 147.5 108.5 73.5
Highway Trust Fund 17.6 17.6 17.6 17.6
Total Transfers $ 165.1 $ 165.1 $ 126.1 $ 91.1
Total General Fund Revenue $ 20,849.7 $ 18,648.4 $ 19,441.9 $ 20,612.5
Totals may differ from the sum of their parts due to rounding.
* Net of tax cut proposals
Table 9
General Fund Revenue
Detailed Estimates for 2008-09 and 2009-11 ($mil)
40
nomic conditions improve. Reflecting this forecast
and the historical volatility of this revenue source,
baseline corporate income tax receipts are ex-pected
to decline slightly in 2009-10 followed by
moderate growth in 2010-11.
Major tax changes
•• Tobacco Tax Increase – To help North Carolina
recover the added health costs incurred be-cause
of smoking, the Governor recommends
increasing the cigarette tax from 35 cents per
pack to $1.35 per pack. The Governor also
recommends raising the tax on other tobacco
products from 10% to 28% of the wholesale
price. These increases would take effect
on September 1, 2009 and are expected to
generate $350.4 million in 2009-10 and $467.1
million in 2010-11. At $1.35 per pack, North
Carolina’s cigarette tax rate would still only
rank 20th (up from 45th currently) among states.
•• Alcohol Tax Increase – The Governor recom-mends
adding a 5.0% tax surcharge to all
alcohol purchases. This additional tax would
take effect on September 1, 2009 and would
previous fiscal year and $581.2 million below
budgeted revenue.
The stimulus and falling prices are expected
to provide a boost for consumers in mid-2009,
yet spending will still likely decline for the year.
Spending is expected to slowly pick up again
through 2010 and 2011. Translated into revenue
collections, baseline sales collections are forecast
to register little to no growth in 2009-10 before
rebounding in 2010-11.
Corporate income taxes
Following a significant decline in 2007-08,
corporate collections have slowed further in
2008-09 as the recession has severely impacted
profitability. Through the first 7 months of 2008-
09, corporate collections were substantially below
the official forecast. This trend is expected to
continue over the remainder of 2008-09, resulting
in collection totals 35.6% below budgeted
revenue.
Corporate profitability is projected to remain flat in
2010 before improving in 2011 as general eco-
Figure 12
General Fund Revenue
Estimates for 2009-10
Individual Income
Tax 53%
Sales and Use
26%
Franchise 3%
Other Tax Insurance 3%
Revenue 6%
Transfers 1%
Nontax Revenue
4%
Corporate Income
Tax 4%
41
Percent Percent
Change Change
2008-09 2008-09 2009-10 2008-09 to 2010-11 2009-10 to
Budgeted Revised Difference Estimated 2009-10 Estimated 2010-11
Individual Income Tax 11,386.2 10,356.1 (1,030.1) 10,399.7 0.4% 10,959.3 5.4%
Sales and Use 5,374.3 4,793.1 (581.2) 5,038.4 5.1% 5,400.3 7.2%
Corporate Income Tax 1,191.5 767.6 (423.9) 785.0 2.3% 837.2 6.6%
Franchise 587.0 607.2 20.2 618.7 1.9% 646.6 4.5%
Insurance 522.2 508.4 (13.8) 520.6 2.4% 535.6 2.9%
Other Tax Revenue 778.2 711.5 (66.7) 1,214.2 70.7% 1,389.7 14.5%
Nontax Revenue 845.2 739.4 (105.8) 739.2 0.0% 752.7 1.8%
Transfers 165.1 165.1 0.0 126.1 -23.6% 91.1 -27.8%
Total Revenues 20,849.7 18,648.4 (2,201.3) 19,441.9 4.3% 20,612.5 6.0%
Unreserved Credit Balance
Total Availability
Table 10
General Fund Revenue
Revised Estimates for 2008-09 and 2009-11, ($mil)
Totals may differ from the sum of their parts due to rounding.
help North Carolina cover the added health
costs incurred from alcohol consumption. This
increase is expected to generate $157.5 and
$210.0 million in 2009-10 and 2010-11, respec-tively.
•• IRC Update - The Governor recommends an
update to the Internal Revenue Code reference
used in defining and determining certain State
tax provisions. Specifically, the Governor rec-ommends
conformity to the endangered spe-cies
deduction and extension of the conserva-tion
easements deduction in the Heartland,
Habitat, Harvest, and Horticulture Act of 2008.
From the Heroes Earnings and Relief Tax Act of
2008, the Governor recommends making state
or local bonus payments to combat veterans
tax-free and allowing military death benefit
contributions to Roth IRAs and Coverdell ESAs.
The Governor also recommends extending
deductions for tuition and certain teacher ex-penses
contained in the Emergency Economic
Stabilization Act of 2008. These changes are
expected to save taxpayers $10.4 and $20.1
million in 2009-10 and 2010-11, respectively.
•• Small Business Relief – As part of the Governor’s
effort to create jobs, stabilize the economy,
and encourage economic investment, the
Governor recommends targeted tax relief for
small business. Specifically, the Governor rec-ommends
that companies with profits below
$100,000 be able to exempt the first $25,000
from net income. Companies with profits be-tween
$100,000 and $200,000 would be able
to exempt the first $15,000. This exemption
would take effect for tax years beginning on or
after January 1, 2010 and is expected to save
small businesses $12.0 million in 2009-10 and
$24.0 million in 2010-11.
•• Founder’s Credit – The Governor recommends
excluding initial stock investments (“founder’s
stock”) in certain NC start-up companies from
capital gains. This credit would take effect
for tax years beginning on or after January 1,
42
2010. There is no fiscal impact estimated for
2009-10 or 2010-11.
•• Expand Earned Income Tax Credit (EITC) – Cur-rently,
North Carolina’s earned income tax
credit is 5.0% of the federal credit. To provide
further relief for low and moderate-income
working families, the Governor recommends
increasing the North Carolina rate to 6.5%
effective for tax years beginning on or after
January 1, 2010. This credit is expected to save
taxpayers $21.0 million in 2010-11.
•• Sales Tax Holiday for WaterSense Products – Wa-terSense,
a partnership program sponsored by
EPA, enhances the market for water-efficient
products and programs. The WaterSense label
indicates that products meet water efficiency
and performance criteria. The Governor rec-ommends
expanding the current Energy Star
Appliance holiday to also include products
with the WaterSense label. There is no esti-mated
fiscal impact in 2009-10 and 2010-11.
•• Caregiver Credit – To help relieve the economic
burden of caring for older family members, the
Governor recommends providing a tax credit
for certain caregiving expenses for qualified
family members. This credit is estimated to
save taxpayers $0.8 million in 2010-11.
•• Fee Increases – The Governor recommends in-creasing
the annual license fee on profession-als
from $50.00 to $200.00. This change and
various smaller fee increases are expected to
generate an additional $27.4 million in 2009-
10 and $30.6 million in 2010-11.
43
budgeted revenues. Revised Highway Fund tax
revenues, for fiscal year 2008-09, are expected
to fall short of budgeted revenues by $114.9
million or 6.2%. Total Highway Fund revenues are
estimated to decline in fiscal years 2009-10 and
2010-11 by 1.4% and 1.5% respectively.
Motor Fuels Excise Tax
The motor fuels excise tax is set twice in a fiscal
year, once in January and again in July. The new
rate is based on a six-month weighted average of
the wholesale price of gasoline and diesel motor
fuels. By actions of the 2007 General Assembly,
to provide relief to North Carolina motorists, the
variable component of the excise tax on motor
fuels was set at a rate not to exceed 12.4 cents per
gallon for the period of July 1, 2007 through June
30, 2009. This capped the tax rate on motor fuels
The Highway Fund receives support from three
revenue sources. The first and primary source
is the excise tax on motor fuels, of which the
Highway Fund receives 75.0%. The second source
of revenue is licenses and fees collected by the
Division of Motor Vehicles. The third source
is interest earned on investments of Highway
Fund cash balances held by the State Treasurer.
Figure 13 shows the percentages of the various
components of the Highway Fund revenue
collections projected for fiscal year 2009-10.
Highway Fund Forecast
The continued fall in consumer and business
confidence as a result of the intensification of
the economic recession has led to a decline in
Highway Fund revenues for fiscal year 2008-09. As
of January 2009, fiscal year-to-date actual Highway
Fund revenues were $42.8 million or 4.1% below
Revenue
Highway Fund
Figure 13
Highway Fund Revenue Collections
2009-10
Driver Licenses
7.5%
International
Registration Plan
(IRP) 3.6%
Staggered
Registration 11.3%
Gasoline
Inspection and
Highw ay Usage
Registration 0.8%
Motor Fuel 65.0%
Truck Licenses
7.7%
Investment Income
0.9%
Other Licenses
and Fees 3.2%
44
to rebound in fiscal year 2009-10 and in fiscal year
2010-11 by 2.3% and 1.9%, respectively.
Investment Income
Through the first seven months of fiscal year 2008-
09, current interest earnings on investments held
with the State Treasurer have exceeded budgeted
revenues by $6.8 million. Total investment income
is expected to meet budgeted revenues of $16.0
million for fiscal year 2008-09. The interest rate
used to estimate the certified budget revenue
for fiscal year 2008-09 was based on an average
annual rate of 4.0%. As of January 2009, the
effective annual interest rate on investments held
with the State Treasurer was 3.6%, down from 5.0%
in January 2008.
The average annual interest rates on investments
held with the State Treasurer are expected to fall
over the biennium, translating into investment
income of $6.0 million in each year.
Revenue Availability
The revenue available for distribution under the
Highway Fund is estimated to be $1,683.5 million
in 2009-10. In 2010-11 the estimated revenue
available for distribution is $1,658.5 million (see
Table 11).
at 29.9 cents a gallon for the period. When the
freeze expires on June 30, 2009, the motor fuels
tax rate is estimated to average 29.16 cents per
gallon in fiscal year 2009-10 and 28.06 cents per
gallon in fiscal year 2009-10.
Nationally, traffic volume as a measure of
vehicle miles driven trended down by 5.3% for
November 2008 as compared to November 2007.
Over the same period, traffic volume in North
Carolina declined 6.0%. The decline in motor fuel
consumption is expected to continue through the
biennium.
As of January 2009, fiscal year-to-date excise tax
collections on motor fuels have fallen $39.8 million
or 5.7% below the fiscal year 2008-09 budgeted
revenue. Total motor fuel tax collections that go to
the Highway Fund are estimated to decline 2.5%
in fiscal year 2009-10 and fall an additional 3.5% in
fiscal year 2010-11.
Licenses and Fees
Revenue collected from staggered registrations,
truck registrations, driver licenses, and certain
miscellaneous fees are expected to decline $17.9
million or 3.0% below budgeted revenues in fiscal
year 2008-09. License and fee revenue is expected
45
2008-09 2008-09 2009-10 % Change 2010-11 % Change
Budgeted Revised Inc/(dec) % Change Estimated* Revised Estimated* 2009-10
$1,184.5 $1,089.1 (95.4) -8.1% $1,061.6 -2.5% $1,024.9 -3.5%
14.9 13.3 (1.6) -10.8% 13.3 0.0% 13.4 0.4%
0.2 0.2 0.0 0.0% 0.2 0.0% 0.2 -23.8%
$1,199.7 $1,102.7 (97.0) -8.1% $1,075.1 -2.5% $1,038.5 -3.4%
$205.9 $197.4 (8.5) -4.1% $201.0 1.8% $204.3 1.7%
65.6 63.0 (2.6) -4.0% 64.5 2.5% 66.0 2.2%
137.4 131.9 (5.5) -4.0% 135.2 2.5% 136.9 1.3%
139.7 134.1 (5.6) -4.0% 137.1 2.2% 140.1 2.2%
58.2 62.6 4.3 7.4% 64.6 3.2% 66.7 3.2%
$606.9 $589.0 (17.9) -3.0% $602.4 2.3% $614.0 1.9%
$16.0 $16.0 0.0 0.0% $6.0 -62.5% $6.0 0.0%
Total Tax Revenue $1,822.6 $1,707.6 (114.9) -6.3% $1,683.5 -1.4% $1,658.5 -1.5%
35.0 35.0 - 0.0 0.0
Total Highway Fund Availability $1,857.6 $1,742.6 (114.9) -6.2% $1,683.5 -3.4% $1,658.5 -1.5%
* Revised Estimate based on actual collections through January 2009.
Truck Licenses
Other Licenses and Fees
Licenses and Fees
Staggered Registration
Beginning Credit Balance
Total Motor Fuel Taxes
Motor Fuels Tax
Motor Fuels
Gasoline Inspection
Highway Use Reg.
Total Licenses and Fees
International Registration Plan
Driver Licenses
Investment Income
Source
Table 11
Highway Fund Revenue
Detailed Estimates for 2009-10 and 2010-11
($ Millions)
46
Highway Trust Fund revenues for fiscal year 2008-
09. As of January 2009, fiscal year-to-date actual
Highway Trust Fund revenues were $94.3 million
or 14.9% below budgeted revenues. Revised
Highway Trust Fund tax revenues, for fiscal year
2008-09, are expected to fall short of budgeted
revenues by $190.6 million or 17.8%. Total
Highway Trust Fund revenues are estimated to
decline 2.8% in fiscal year 2009-10 and increase
slightly in fiscal year 2010-2011.
Highway Use Tax
The decline in motor vehicle sales are a result
of a faltering economy beset with tight credit,
increasing unemployment, and falling consumer
demand for automobiles. As of January 2009,
fiscal year-to-date highway use tax collections
have fallen $72.9 million or 21.7% below fiscal
The Highway Trust Fund, established in 1989,
receives support from four sources. The first
and primary source is the highway use tax,
or sales tax, on most noncommercial vehicle
sales. The second source is twenty-five percent
(25.0%) of the excise tax on motor fuels. The
third source is fees on certificates of title and
other miscellaneous titles. The final source is
the interest earned from investments of the
Highway Trust Fund cash balances held by the
State Treasurer. Figure 14 shows the percentages
of the various components of the Highway Trust
Fund revenue collections projected for fiscal year
2009-10.
Highway Trust Fund Forecast
The continued fall in consumer and business
confidence as a result of the intensification of
the economic recession has lead to a decline in
Revenue
Highway Trust Fund
Figure 14
Highway Trust Fund Revenue Collections
2009-10
Motor Fuels Tax
36.8%
Highw ay Use 53.1%
Certificate of Title
Miscellaneous Title Fees 8.3%
Fees 1.6%
Interest on
Investments 0.2%
47
declined 19.7%, slower than highway use tax
collections. Over the same period, miscellaneous
title fees declined 21.3%. Total combined fee
collections for fiscal year 2008-09 are estimated
to fall below certified budgeted revenues by
$16.8 million or 15.9%. Total combined title fee
collections are estimated to increase 2.2% in
fiscal year 2009-10 and 2.1% in fiscal year 2010-
11.
Investment Income
Highway Trust Fund cash balances held with the
State Treasurer are used to pay more frequent
expenses associated with contractual activity.
The monthly interest earnings are subject to
more variable principal balances. Through
the first seven months of fiscal year 2008-09,
interest earnings on investments held with the
state treasurer are $1.0 million below certified
budgeted revenues. As of January 2009, the
effective annual interest rate on investments
held with the State Treasurer was 3.6%, down
from 5.0% in January 2008.
The average annual interest rates on investments
held with the State Treasurer are expected to fall
over the biennium, translating into investment
income of $1.4 million in each year.
Transfers to General Fund
Prior to the creation of the Highway Trust Fund
in 1989, the sales or use tax from the retail sale
and the long-term lease of motor vehicles was
collected under General Fund revenues. In
order to hold the General Fund harmless, an
annual distribution is made from the Highway
Trust Fund revenue collections to the General
Fund. By actions of the 2008 General Assembly,
the annual distribution will be reduced each
year until the transfer to the General Fund is
phased out. For fiscal years 2009-10 and 2010-
11, the transfers are $108.6 and $72.9 million,
respectively.
Revenue Availability
The revenue available for distribution under the
Highway Trust Fund is estimated to be $748.9
million in 2009-10 and $811.3 million in 2010-11
(see Table 12).
year 2008-09 budgeted revenue. Total highway
use tax collections for fiscal year 2008-09 are
estimated to be below budgeted revenues by
$142.0 million or 24.9%. With no improvement
expected in vehicle sales in fiscal year 2009-10,
total highway use tax collections are estimated
to fall an additional 4.0%. A slight increase is
expected in fiscal year 2010-11.
Motor Fuels Excise Tax
The motor fuels excise tax is set twice in a fiscal
year, once in January and again in July. The new
rate is based on a six-month weighted average of
the wholesale price of gasoline and diesel motor
fuels. To provide relief to North Carolina motorists,
by actions of the 2007 General Assembly, the
variable component of the excise tax on motor
fuel was set at a rate not to exceed 12.4 cents per
gallon for the period of July 1, 2007 through June
30, 2009. This capped the tax rate on motor fuels
at 29.9 cents a gallon for the period. When the
freeze expires on June 30, 2009, the motor fuel tax
rate is estimated to be 29.16 cents per gallon in
fiscal year 2009-10 and 28.06 cents per gallon in
fiscal year 2010-11.
Nationally, traffic volume as a measure of
vehicle miles driven trended down by 5.3% for
November 2008 as compared to November 2007.
Over the same period, traffic volume in North
Carolina declined 6.0%. The decline in motor fuel
consumption is expected to continue through the
biennium.
As of January 2009, fiscal year-to-date excise tax
collections on motor fuels credited to the Highway
Trust Fund have fallen $8.4 million or 3.6% below
budgeted revenues for fiscal year 2008-09. Total
motor fuel tax collections that go to the Highway
Trust Fund are estimated to decline 2.5% in fiscal
year 2009-10 and fall an additional 3.5% in fiscal
year 2010-11.
Miscellaneous Title Fees
Certificates of title and other miscellaneous title
fee collections generally trend up or down with
highway use tax collections. For the first seven
months of fiscal year 2008-09, certificates of title
48
2008-09 2008-09 2009-10 % Change 2010-11 Percent
Budgeted Revised Inc/(dec) % Change Estimated* Revised Estimated* Change
$394.9 $363.0 (31.8) -8.1% $353.9 -2.5% $341.6 -3.5%
570.0 428.0 (142.0) -24.9% 410.9 -4.0% 447.9 9.0%
89.2 74.4 (14.8) -16.6% 76.2 2.5% 77.9 2.2%
17.1 15.0 (2.0) -12.0% 15.1 0.7% 15.4 1.7%
$1,071.0 $880.4 (190.6) -17.8% $856.1 -2.8% $882.8 3.1%
$2.1 $2.1 0.0 0.0% $1.4 -34.0% $1.4 0.0%
$ 1,073.2 $ 882.5 (190.6) -17.8% $857.5 -2.8% $884.2 3.1%
Transfer to General Fund** 147.5 147.5 (108.56) (72.85)
Revenue Available $925.6 $735.0 (190.6) -20.6% $748.9 1.9% $811.3 8.3%
* Revised Estimate based on actual collections through January 2009.
Table 12
Detailed Estimates for 2009-10 and 2010-11
($ Millions)
Highway Trust Fund Revenue
** Statutory distribution, G.S.105-187.9
Total Highway Trust Fund Availability
Interest on Investments
Source
Fuel Taxes and Fees
Highway Use
Certificate of Title Fees
Miscellaneous Title Fees
Subtotal
Motor Fuel Tax
49
Capital
Improvements
General Fund
Non-General Fund
General Fund
Capital Improvements
51
North Carolina State Budget
Summary of Recommendations, 2009-11
Governor's Recommended Adjustments to Base Budget
Capital Improvements - General Fund (19600)
Recommended General Fund Budget and Positions
2009-10 2010-11
Base Budget
Requirements - -
Receipts - -
Appropriation - -
Recommended Adjustments
Requirements $110,745,588 -
Receipts $83,145,588 -
Appropriation $27,600,000 -
Total
Requirements $110,745,588 -
Receipts $83,145,588 -
Recommended Appropriation $27,600,000 -
Positions
Base Budget Positions - -
Reductions - -
Expansion - -
Recommended Positions - -
General Fund
Capital Improvements
52
North Carolina State Budget
Summary of Recommendations, 2009-11
Appropriation Items -- Legislative Revisions and Other Adjustments
Expansion
2009-10 2010-11
Natural and Economic Resources
1. DENR - Water Resources Projects
The Governor recommends funds for the state's share of civil works
projects for navigation, flood control, drainage, and beach protection.
The costs of these projects are shared by federal and/or local
governments using a statutory formula.
Requirements - Nonrecurring $100,745,588
Receipts - Nonrecurring $83,145,588
Appropriation - Nonrecurring $17,600,000 -
UNC Board of Governors
1. UNC-CH Biomedical Research Imaging Center (BRIC)
The Governor recommends an appropriation of $10,000,000 for the
UNC-CH Biomedical Research Imaging Center. This project includes a
343,000 square-foot facility that will support image-based biomedical
research across the UNC system utilizing current programs in medical
imaging at Chapel Hill and NCSU through the new joint Department of
Biomedical Engineering. This facility will also be used for cancer drug
research in collaboration with the Biomanufacturing Research Institute
and Technology Enterprise program (BRITE) at NCCU. The estimated
total project cost is $280 million. The General Assembly appropriated
$8 million in FY 2007-08 to begin planning this project. In FY 2008-09,
the General Assembly appropriated $35 million to complete planning,
begin site development, pre-purchase materials, and increase the
scope of the project to include wet labs and drug research space.
Due to the budget shortfall and based on estimated cash flow
projections, the FY 2008-09 appropriation was reduced to $12.5 million.
As a result, a total of $20.5 million has been made available for this
project. The university expects to receive $20 million in receipts and
gifts towards the project. This appropriation will provide funding for
projected cash flow requirements through FY 2009-10. An additional
$229.5 million will be needed to fund later phases of the project which
is scheduled for completion in 2013. The governor intends to finance
the completion of the project using bonded indebtedness beginning in
FY 2010-11. Repayment of debt will be shared, with 15% from UNC-Chapel
Hill, 15% from UNC Hospitals, and 70% from the General Fund.
General Fund
Capital Improvements
53
North Carolina State Budget
Summary of Recommendations, 2009-11
It is estimated that 7,898 jobs will be created or preserved in the State
during the construction of this project. The impact on health and
economic well-being is even greater. The annual cost of cancer in the
state is estimated to be about $5.57 billion; $1.89 billion for direct
medical care and $3.68 billion in lost productivity due to illness and
premature death.
The Biomedical Research Imaging Center is already underway. The early
site package, the first phase of the project, is under contract and set to
begin construction in April 2009. The concrete foundation and frame
(phase II) will begin in the fall of 2009.
Appropriation - Nonrecurring $10,000,000
Total Recommended Expansion
2009-10 2010-11
Recurring
Requirements - -
Receipts -
-
Appropriation - -
Positions - -
Nonrecurring
Requirements $110,745,588 -
Receipts 83,145,588
-
Appropriation $27,600,000 -
Positions - -
Non-General Fund
Capital Improvements
54
North Carolina State Budget
Summary of Recommendations, 2009-11
Total Recommended Adjustments for
Capital Improvements - General Fund (19600)
2009-11
2009-10 2010-11
Recurring
Requirements - -
Receipts - -
Appropriation - -
Positions - -
Nonrecurring
Requirements $110,745,588 -
Receipts 83,145,588 -
Appropriation $27,600,000 -
Positions - -
Total Appropriation Adjustments $27,600,000 -
Total Position Adjustments - -
Non-General Fund
Capital Improvements
55
North Carolina State Budget
Summary of Recommendations, 2009-11
Governor's Recommended Adjustments to Base Budget
Capital Improvements - Non-General Fund (19600)
Recommended Non-General Fund Budget and Positions
2009-10 2010-11
Base Budget
Requirements - -
Receipts - -
Appropriation - -
Recommended Adjustments
Requirements - -
Receipts - -
Appropriation - -
Total
Requirements - -
Receipts - -
Recommended Appropriation - -
Positions
Base Budget Positions - -
Reductions - -
Expansion - -
Recommended Positions - -
57
Reserves, Debt Service,
and Other Adjustments
General Fund
Reserves, Debt Service, and Other Adjustments
59
North Carolina State Budget
Summary of Recommendations, 2009-11
Governor's Recommended Adjustments to Base Budget
Reserves, Debt Service, and Other Adjustments - General Fund (190xx)
Recommended General Fund Budget and Positions
2009-10 2010-11
Base Budget
Requirements $986,063,200 $1,143,953,150
Receipts $51,504,322 $45,685,244
Appropriation $934,558,878 $1,098,267,906
Recommended Adjustments
Requirements ($207,222,318) ($222,737,128)
Receipts - -
Appropriation ($207,222,318) ($222,737,128)
Total
Requirements $778,840,882 $921,216,022
Receipts $51,504,322 $45,685,244
Recommended Appropriation $727,336,560 $875,530,778
Positions
Base Budget Positions - -
Technical Adjustments - -
Reductions (75.000) (100.000)
Expansion 15.000 15.000
Recommended Positions (60.000) (85.000)
Reserves, Debt Service, and Other Adjustments
60
North Carolina State Budget
Summary of Recommendations, 2009-11
Appropriation Items -- Legislative Revisions and Other Adjustments
Reductions
2009-10 2010-11
Statewide Reserves
1. Salary Adjustment Fund
It is recommended that monies in the Salary Adjustment Fund be
eliminated for the FY 2009-11 biennium.
Appropriation ($4,500,000) ($4,500,000)
2. Budget Health Care Premiums at Actual Costs
It is recommended that employer-paid funds for health care premiums be
budgeted at actual costs, since many state employees choose not to
participate in the State Health Plan. This reduction will not affect any
employee who is covered by the State Health Plan.
Appropriation ($25,000,000) ($25,000,000)
3. Freeze Longevity Payments for Two Years/Hold Retirement Calculation Harmless
It is recommended that teacher and state employee longevity payments
be frozen for two years. Teachers' and state employees' final retirement
calculations shall be held harmless from this longevity reduction.
Appropriation - Nonrecurring ($173,000,000) ($177,800,000)
4. Administrative Support Reduction Reserve
It is recommended that administrative support positions be reduced
statewide based on a 10:1 ratio. This ratio of employees to support staff is
standard in the private sector. Agencies shall make every attempt to
generate these savings through attrition; if filled positions need to be
eliminated, each agency, with assistance from the Office of State
Personnel, shall work to find employees an existing position in state
government.
Appropriation ($3,000,000) ($4,000,000)
Positions (75.000) (100.000)
5. Budget E-Procurement Receipts
Beginning in the second half of the biennium, the State will no longer
require all the revenue generated from the E-Procurement transaction fee
to run the E-Procurement system. These transaction fees will provide
funding for the IT Fund, thereby allowing for a reduction in general fund
appropriations. It assumes the current transaction fee of 1.75% will
remain.
Appropriation ($10,000,000)
Reserves, Debt Service, and Other Adjustments
61
North Carolina State Budget
Summary of Recommendations, 2009-11
6. Debt Service Requirements
It is recommended that debt service appropriations be reduced based
on lower than originally anticipated interest rates.
Appropriation ($4,000,000) ($4,000,000)
Appropriation - Nonrecurring ($3,500,000)
Total Recommended Reductions
2009-10 2010-11
Recurring
Requirements ($36,500,000) ($47,500,000)
Receipts -
-
Appropriation ($36,500,000) ($47,500,000)
Positions (75.000) (100.000)
Nonrecurring
Requirements ($176,500,000) ($177,800,000)
Receipts -
-
Appropriation ($176,500,000) ($177,800,000)
Positions - -
Expansion
2009-10 2010-11
Employee Benefits
1. Bonus Leave for State Employees
It is recommended that all state employees, except those paid on the
Teacher Salary Schedule, shall receive bonus leave for each year of the
biennium in lieu of longevity payments. The amount of bonus leave
received is commensurate to the employee's years of service in state
government. Employees with less than 10 years would receive no bonus
leave; employees with 10-15 years would receive 32 hours; employees
with 15-20 years would receive 48 hours; employees with 20-25 years
would receive 68 hours; and employees with 25+ years would receive 94
hours.
Appropriation - -
Reserves, Debt Service, and Other Adjustments
62
North Carolina State Budget
Summary of Recommendations, 2009-11
Other Reserves
1. 2010 Census Local Promotion
It is recommended that funds be appropriated to support the ''NC Can
Count on Me'' 2010 Census promotional campaign. 2010 Census data
will be used to apportion seats in the United States Congress and the
North Carolina General Assembly, distribute state and federal resources,
and support needs assessment and planning for the future of our
communities. The campaign will support the creation of local Complete
Count Committees across the state by providing information and
material to inform North Carolinians of the importance of the United
States Census and encourage their participation. The campaign will also
include public service announcements for broadcast across the state's
television and radio stations. Funds will be managed by the State Data
Center in the Office of State Budget and Management.
Appropriation - Nonrecurring $750,000 -
Transparency and Accountability
1. State Web Portal and Accountability Web sites
It is recommended that funds be appropriated to support ongoing
operations of the State web portal and accountability websites that
provide citizens easier access to public information, enhance service
delivery, encourage citizen involvement, increase transparency of state
spending, and promote efficiency in government processes. This
direction was called for in Executive Order No. 4.
Appropriation $500,000 $500,000
2. Budget and Performance Management System
It is recommended that funds be appropriated to create and maintain a
budget and performance management system that will replace the
current legacy budget preparation system. This new system will also
automate the expansion and capital budgeting processes, and
incorporate the following elements of performance management called
for in Executive Order No. 3: strategic planning, performance tracking of
management functions, monitoring of program performance, improved
agency accountability, identification of agency inefficiencies, and
coordination in meeting cross-cutting state goals.
Appropriation $500,000 $500,000
Appropriation - Nonrecurring $2,750,000 $500,000
3. Federal Economic Recovery Management and Accountability
It is recommended that funds be appropriated to provide for the
operations of the Office of Economic Recovery and Investment in order
to maximize the State's use of available federal economic recovery
funds, report on the use of the funds, and measure progress of the
re

The North Carolina State Budget
Summary of Recommendations
2009-2011
Beverly Eaves Perdue
Governor
The North Carolina State Budget
Summary of Recommendations
2009-2011
Office of State Budget and Management
Office of the Governor
Raleigh, North Carolina
www.osbm.state.nc.us
Charles E. Perusse, State Budget Director
David Brown, Deputy Director for Budget
Jonathan Womer, Deputy Director for Management
March 2009
State of North Carolina
Office of the Governor
Beverly Eaves Perdue
Governor
Office of the Governor · Phone: (919)733-4240 · Fax: (919)733-2120 · Email: governor.office@nc.gov
March 17, 2009
The North Carolina Senate
The Honorable Marc Basnight, President Pro Tempore
The North Carolina House of Representatives
The Honorable Joe Hackney, Speaker
Dear Mr. President, Mr. Speaker, Ladies and Gentlemen of the General Assembly and Fellow North
Carolinians:
The challenges we face together are unprecedented in modern times. North Carolina is in the midst
of its greatest economic crisis since the Great Depression, the result of the rapid and dramatic global
downturn in the housing and financial markets. As families and businesses across our state are
tightening their belts to make ends meet, government must do the same. But, in the process, we
must not neglect the state’s most pressing needs.
My proposed biennial budget makes strategic investments to create jobs and increases overall per
student spending, while ensuring that North Carolina state government lives within its means. It
closes a cumulative budget gap of $6.4 billion over two years, with the estimated shortfall totaling
$3.4 billion in FY 2009-10 and $3.0 in FY 2010-11. The budget contains $2.6 billion in spending
reductions ($1.3 billion in each year); utilizes $2.9 billion of federal recovery monies to support
education and other mission-critical services over the biennium; and recommends targeted revenue
changes totaling $1.3 billion over two years, designed to protect education and help offset
healthcare costs associated with the use of tobacco products and alcohol.
Most programs face reduced or level funding compared to FY 2008-09. However, despite the
difficult road we face, I believe it is critical that we continue making progress in areas that are core
to North Carolina’s values. That is why my budget recommendations focus on:
􀂾􋹇 Growing North Carolina’s Economy
􀂾􋹉 Improving Public Education
􀂾􋹋 Keeping Higher Education Accessible and Affordable
􀂾􋹐 Protecting Our Most Vulnerable Citizens
􀂾􋹋 Keeping Our Communities Safe
􀂾􋹍 Making Government More Efficient and Accountable
􀂾􋹆 Fiscal Responsibility
Growing North Carolina’s Economy
My number one priority is to create jobs. This budget contains several key investments around
infrastructure, assistance to small businesses and workforce development. Specifically, it includes
$50 million in state funds to maximize federal resources for water and sewer, navigation, flood
control, drainage and beach protection projects. The budget invests $7 million in the Main Street
Program which provides grants to communities to revitalize downtown areas and $2 million for the
Small Business Innovation Research matching grant program. Monies also are included to
construct the Biomedical Research Imaging Center in Chapel Hill, which will work collaboratively
with image-based research and cancer research programs in the UNC System. This project will
have a significant impact on health care, particularly in the areas of cancer, drug discovery,
nanotechnology and nanopharmacology, and will create jobs in North Carolina.
The budget provides an additional $2 million to promote North Carolina as a business and tourism
destination, as well as to better market our agriculture products to companies throughout the United
States. It also earmarks $5 million for the Green Business Fund to encourage the growth of
businesses developing green technology. Finally, it provides $36 million in tax relief for small
businesses. Businesses with profits less than $100,000 will be able to exempt the first $25,000 of
net income from tax; businesses with profits between $100,000 and $200,000 will exempt the first
$15,000.
Through my Jobs Now initiative, the budget makes substantial investments in community college
programs focused on preparing students for the new 21st century careers. It includes $5 million to
hire additional faculty to help reduce the state’s backlog for nurses. Funds are provided ($3
million) to support technical education programs in the areas of transportation, industrial, military
and green technology sectors. The budget also provides an additional $5 million annually to
address equipment and technology needs throughout the community college system. Finally, $5
million in federal recovery funds are earmarked to support displaced workers with child care,
tuition and transportation costs while pursuing job training services.
Improving Public Education
Even in these tough economic times, I remain committed to improving public education and
transforming our classrooms. Overall, year to year spending (including federal recovery monies)
increases by $118 million (1.1.%), even though enrollment is expected to decline by .79% over the
same period. Total per student funding increases from $5,597 to $5,736. This budget focuses on
administrative efficiencies and allows local education leaders the flexibility to choose where
savings can be implemented. It was not possible to avoid some reductions to the single largest
expenditure in our budget.
My budget includes $4.7 million for diagnostic assessments, so we can get to kids before they fall
behind in school. We are refocusing our testing requirements to more accurately measure our
students’ progress and to hold our schools accountable. It also recommends additional recurring
funds for innovative dropout prevention programs ($7 million) and statewide support for
underperforming schools in response to the Leandro lawsuit ($3.5 million). Monies also are
provided for the experience-based step increase for teacher salary schedule employees ($64 million)
to fulfill our commitment to meet the national average. Finally, my 2009-11 budget
recommendation does not reduce, redirect or transfer any lottery or corporate income tax receipts
from the Public School Building Capital Fund.
Keeping Higher Education Accessible and Affordable
The investments we make in our current and future workforce are more important than ever during
this economic downturn. My budget fully funds enrollment for all students hoping to attend a
community college (12,519 FTE or +6.2%) or UNC system institution (4,705 FTE or +2.6%). The
budget provides a contingency reserve ($3 million) for community colleges that see a large spike in
enrollment due to deteriorating employment conditions. My budget does not recommend a tuition
increase to ensure access is not impacted.
In addition, my budget takes steps toward fulfilling the “College Promise” of accessible, debt-free
higher education for everyone along with a seamless education path, from pre kindergarten through
vocational, community college or the university, that fit students’ needs. It includes $2.6 million to
expand our early college high schools to 12 new sites and provides an additional $23 million for
need-based financial aid.
Protecting Our Most Vulnerable Citizens
The proposed budget preserves funds that protect and help our most vulnerable populations. It
limits reductions in direct services and does not displace persons currently being served by
Medicaid. Many provider reimbursement rates have been frozen; however, base service rates have
not been reduced. It is imperative that we do not impact our citizens’ ability to gain access to
needed health services.
My budget includes $12 million to purchase an additional 111 local private hospital beds for mental
health patients who require short term care and $3 million to retain 36 overflow beds at Dorothea
Dix Hospital in Raleigh. Additional monies are recommended for the State Children’s Health
Insurance Program, which provides health insurance for an additional 8,000 children from working
families. It earmarks federal recovery funds to reduce the waiting list for child care subsidies.
Finally, this budget provides tax relief to low and moderate-income working families by increasing
the earned income tax credit from 5% to 6.5%.
Keeping Our Communities Safe
This budget invests an additional $12 million per year in the probation system to ensure supervision
is administered swiftly and correctly. It adds 29 supervisor and 117 officer positions to allow for
more manageable caseloads. Funds also are included to raise employee pay grades to improve the
recruitment and retention of officers. Finally, the budget earmarks $10 million in federal recovery
funds for gang-related programs. Monies would be made available to local law enforcement,
juvenile justice and education personnel for services that focus on gang prevention, treatment,
intervention and re-entry programs.
Making Government More Efficient and Accountable
This budget reinforces my commitment to streamline government and make it more transparent,
accountable and efficient. It includes $2.6 billion in savings throughout state government. These
recommendations follow a set of very important principles.
First, wherever possible, the budget proposes recurring savings rather than one-time actions. The
choices are difficult but essential to ensure the long-term health of North Carolina’s finances.
Second, when looking at savings across agencies, one size does not fit all. I asked agency heads to
take a targeted approach when identifying reductions.
It is imperative that we maintain quality in our core service areas that citizens need most. My
budget reduces or eliminates more than 20 programs that are duplicative, costly, inefficient or
nonessential. Finally, the budget looks beyond just identifying easy savings to a deeper discussion
about transitioning from our current incremental budgeting approach to one that focuses on results.
My budget includes additional monies to update the state’s web portal and to implement NC
OpenBook. Making government services more accessible through the web improves service quality
and reduces administrative costs. The budget provides funds to stabilize the BEACON human
resources and payroll system. My budget also continues to reduce the amount of monies transferred
from the Highway Trust Fund to the General Fund.
Fiscal Responsibility
North Carolina is seeing dramatic declines in revenues during this recession, yet we are acting
prudently and decisively to produce a balanced budget. This recommendation is $360 million (or
1.8%) less than the fiscal year 2009 budget, even after assuming $200 million in local Medicaid
expenses – and even after factoring in federal recovery funds. Our population is expected to
increase by 1.5% next year, so the per capita budget will decline by 3.2% (from $2,273 to $2,201)
when compared to 2009. My budget does not authorize any additional debt in 2009-10. Our
willingness to make difficult decisions has not gone unnoticed. We continue to be one of only
seven states with a Triple A rating from each of the major bond rating agencies.
Conclusion
We have a long history of stepping up to the plate and working together when our citizens need us
most. I stand ready to work with you to strengthen and grow our middle class and small businesses;
to improve public education and public safety services throughout our state; to ensure that
government works smart for our citizens; and to expand opportunity for all North Carolinians.
I look forward to working with you this session.
Sincerely,
Bev Perdue
vii
Table of Contents
Letter from the Governor..............................................................................................iii
List of Figures and Tables...............................................................................................ix
Preface.................................................................................................................................xi
Introduction.................................................................................................................... xv
Executive Priorities and Budget Summary...............................................................1
Major Expansion Budget Recommendations
Fiscal Responsibility..................................................................................................17
Education......................................................................................................................18
General Government................................................................................................21
Health and Human Services...................................................................................22
Justice and Public Safety.........................................................................................24
Natural and Economic Resources........................................................................25
Transportation............................................................................................................26
Capital Improvements..............................................................................................30
Teachers and State Employees..............................................................................31
Economy and Revenue
Economy
Outlook for the Nation and State................................................................35
Revenue
General Fund Forecast.....................................................................................38
Highway Fund....................................................................................................43
Highway Trust Fund..........................................................................................46
Recommended Adjustments for Capital Improvements.................................51
Recommended Adjustments for Reserves, Debt Service, and Other..........59
Federal Recovery and Investment............................................................................67
Appendix..........................................................................................................................71
ix
List of Figures and Tables
Figures
1. Distribution of the General Fund Operating Budget....................................3
2. Average Daily Membership Budgeted............................................................18
3. Enrollment in Community College System...................................................19
4. Enrollment in the University System...............................................................20
5. Medicaid Expenditures and Eligibility.............................................................22
6. Funding Sources, NC Transportation Program, 2009-10..........................27
7. Funding Sources, NC Transportation Program, 2010-11..........................28
8. Appropriations, NC Transportation Program, 2009-10.............................28
9. Appropriations, NC Transportation Program, 2010-11.............................29
10. Authorized Proposed Capital Funds................................................................30
11. N.C. Income Expected to Exceed U.S...............................................................37
12. General Fund Revenue.........................................................................................40
13. Highway Fund Revenue Collections................................................................43
14. Highway Trust Fund Revenue Collections.....................................................46
Tables
1. Recommended General Fund Budget...............................................................4
2. Governor’s Recommended General Fund Budget, 2009-10......................5
3. Governor’s Recommended General Fund Budget, 2010-11......................7
4. Governor’s Recommended Highway Fund and Highway
Trust Fund Budgets, 2009-10................................................................................9
5. Governor’s Recommended Highway Fund and Highway
Trust Fund Budgets, 2010-11.............................................................................10
6. Recommended General Fund Availability and Appropriations.............11
7. Recommended Highway Fund Availability and
Appropriations.........................................................................................................12
8. Recommended Highway Trust Fund Availability and
Appropriations........................................................................................................13
9. General Fund Revenue, Detailed Estimates..................................................39
10. General Fund Revenue, Estimates....................................................................41
11. Highway Fund Revenue Availability................................................................45
12. Highway Trust Fund Revenue Availability.....................................................48
x
Appendix Tables
1A. Condition of the General Fund.........................................................................73
1B. Condition of the Highway Fund.......................................................................74
1C. Condition of the Highway Trust Fund.............................................................75
1D. Savings Reserve Account Balance...................................................................76
2. Total Authorized NC State Budget..................................................................77
3A. Total NC State Budget by Function, Department, and
Source of Funds, 2009-10...................................................................................78
3B. Total NC State Budget by Function, Department, and
Source of Funds, 2010-11....................................................................................85
3C. Total NC Transportation Budget by Function and
Source of Funds, 2009-10...................................................................................92
3D. Total NC Transportation Budget by Function and
Source of Funds, 2010-11...................................................................................93
4. Trends in the Total State Budget......................................................................94
5. Total Authorized State Budget by Source of Funds..................................95
6. Highway Fund State Tax and Nontax Revenue..........................................96
7. Highway Trust Fund Tax and Nontax Revenue...........................................97
8. General Fund Tax and Nontax Revenue........................................................98
9. Authorized General Fund Appropriations...................................................99
10. General Fund Operating Appropriation for Public
Schools, Community Colleges, and Higher Education..........................100
xi
Preface
The North Carolina State Budget: Recommended Operating Budget with Performance Manage-ment
Information, 2009-2011 reflects the work of multiple people within the Office of State
Budget and Management (OSBM) and the Office of Economic Recovery and Investment. Bud-get
administrators and analysts, economists, technical staff, and paraprofessionals are listed
below by administrative area.
This document is available online at www.osbm.state.nc.us. For additional information about
its contents, please contact the appropriate administrator at the e-mail address cited below
or by telephone at 919/807-4700. The mailing address for OSBM is 20320 Mail Service Center,
Raleigh, NC 27699-0320.
Office of State Budget and Management
Charles Perusse, State Budget Director (charles.perusse@osbm.nc.gov)
Debbie Young, Special Assistant to State Budget Director (debbie.young@osbm.nc.gov)
Business Office
Arnetha Dickerson, Business Officer (arnetha.dickerson@osbm.nc.gov)
Frances Doak, Accounting Technician (frances.doak@osbm.nc.gov)
Laveta Pickett, Accounting Technician (laveta.pickett@osbm.nc.gov )
Human Resources
Ursula Hairston, Human Resources Director (ursula.hairston@osbm.nc.gov)
Shelia Stewart, Human Resources Coordinator (shelia.stewart@osbm.nc.gov)
Tonya Austin, Human Resources Associate (tonya.austin@osbm.nc.gov)
Internal Audit
Barbara Baldwin, Internal Audit Manager (barbara.baldwin@osbm.nc.gov)
Michele Evans, Internal Auditor (michele.evans@osbm.nc.gov)
Regina Hill, Internal Auditor – Information Systems (regina.hill@osbm.nc.gov)
Courtney Michelle, Internal Auditor (courtney.michelle@osbm.nc.gov)
Quality Assurance
vacant, Director of Quality Assurance
Betty Haley, Research Assistant (betty.haley@osbm.nc.gov)
xii
David Brown, Deputy Director for Budget (david.brown@osbm.nc.gov)
Kela Lockamy, Executive Assistant to Deputy State Budget Directors
(kela.lockamy@osbm.nc.gov)
Julie Mitchel, Associate State Budget Director (julie.mitchel@osbm.nc.gov)
Susie Esealuka, Team Assistant (susie.esealuka@osbm.nc.gov)
Pat Taylor, Team Assistant (pat.taylor@osbm.nc.gov)
Education
Elizabeth Grovenstein, Assistant State Budget Officer
(elizabeth.grovenstein@osbm.nc.gov)
Pam Leaman, Budget Analyst (pam.leaman@osbm.nc.gov)
Bryan Conrad, Budget Analyst (bryan.conrad@osbm.nc.gov)
Joyce Wallace, Budget Analyst (joyce.wallace@osbm.nc.gov)
vacant, Budget Analyst
Health and Human Services
Jennifer Hoffmann, Assistant State Budget Officer (jennifer.hoffmann@osbm.nc.gov)
Pam Kilpatrick, Budget Analyst (pam.kilpatrick@osbm.nc.gov)
Kari Barsness, Budget Analyst (kari.barsness@osbm.nc.gov)
Melvin Lee, Budget Analyst (melvin.lee@osbm.nc.gov)
Wayne Williams, Budget Analyst (wayne.williams@osbm.nc.gov)
Infrastructure
Jim Lora, Assistant State Budget Officer (jim.lora@osbm.nc.gov)
Adam Breuggemann, Budget Analyst (adam.breuggemann@osbm.nc.gov)
Kristen Crosson, Budget Analyst (kristen.crosson@osbm.nc.gov)
Jennifer Wimmer, Budget Analyst (jennifer.wimmer@osbm.nc.gov)
Sarah Porper, IT Budget Analyst (sarah.porper@osbm.nc.gov)
Justice and Public Safety / Natural and Environmental Resources / General Government
Sheryl Kelly, Assistant State Budget Officer (sheryl.kelly@osbm.nc.gov)
Donna Cox, Budget Analyst (donna.cox@osbm.nc.gov)
Aaron Gallagher, Budget Analyst (aaron.gallagher@osbm.nc.gov)
Jack Hubbard, Budget Analyst (jack.hubbard@osbm.nc.gov)
Alicia James, Budget Analyst (alicia.james@osbm.nc.gov)
Trevor Minor, Budget Analyst (trevor.minor@0sbm.nc.gov)
Cheryl Reed, Budget Analyst (cheryl.reed@osbm.nc.gov)
Transportation
Mercidee Benton, Assoc. State Budget Officer for Transportation
(mercidee.benton@osbm.nc.gov)
xiii
Jonathan Womer, Deputy Director for Management (jonathan.womer@osbm.nc.gov)
Kela Lockamy, Executive Assistant to Deputy State Budget Directors
(kela.lockamy@osbm.nc.gov)
Demographic and Economic Analysis
Nathan Knuffman, Associate State Budget Officer (Nathan.Knuffman@osbm.nc.gov)
Warren Plonk, Economic Analyst (warren.plonk@osbm.nc.gov)
Will Crumbley, Economic Analyst (william.crumbley@osbm.nc.gov)
Jennifer Song, State Demographer (jennifer.song@osbm.nc.gov)
Government Evaluation and Review
Anne Bander, Assistant State Budget Officer (anne.bander@osbm.nc.gov)
Angela Houston, Management Analyst (angela.y.houston@osbm.nc.gov)
Philip Bartholomew, Management Analyst (philip.bartholomew@osbm.nc.gov)
Donald Crooke, Management Analyst (donald.crooke@osbm.nc.gov)
John Leskovec, Management Analyst (john.leskovec@osbm.nc.gov)
Joe Turlington, Management Analyst (joe.turlington@osbm.nc.gov)
Strategic Management
Erin Matteson, Associate State Budget Officer (erin.matteson@osbm.nc.gov)
Bill Stockard, Management Analyst (bill.stockard@osbm.nc.gov)
Bob Coats, Business and Technology Applications Analyst (bob.coats@osbm.nc.gov)
Brandon James, Management Analyst (brandon.james@osbm.nc.gov)
Joe White, Management Analyst (joseph.white@osbm.nc.gov)
Technology and Data Services
Joel Sigmon, Assistant State Budget Officer (joel.sigmon@osbm.nc.gov)
Francine Stephenson, Business and Technology Applications Specialist
(francine.stephenson@osbm.nc.gov)
Wayne Crews, Business and Technology Applications Specialist
(wayne.crews@osbm.nc.gov)
Agness Gunter, Business and Technology Applications Specialist
(agness.gunter@osbm.nc.gov)
Paula Jones, Business and Technology Applications Analyst (paula.a.jones@osbm.nc.gov)
Ernest Pecounis, Business and Technology Applications Analyst
(ernest.pecounis@osbm.nc.gov)
Lucy Ringland, Technical Editor/Applications Analyst (lucy.ringland@osbm.nc.gov)
Paul Young, Business and Technology Applications Specialist (paul.young@osbm.nc.gov)
Office of Economic Recovery and Investment
Dempsey Benton, Director (dempsey.benton@osbm.nc.gov)
xv
son of the economic conditions in North Carolina
to national averages. The most current revenue
forecast is explained. Estimates of fund availability
for the General Fund, Highway Fund, and High-way
Trust Fund show the supporting basis for the
recommended state budget (see tables 6, 7-8, 10,
and 11-12).
Statewide types of budget adjustments
Brief explanations of recommended adjustments
to the budget for statewide areas, such as capital
improvements, salaries and benefits, and debt
service, are contained in this summary volume.
These appear in sections titled “Capital Improve-ments”
and “Reserves, Debt Service, and Other
Adjustments.”
Budgets by department, including results-based
information
Details on the recommendations for each bud-geted
budget code, other than those presented
for statewide types of adjustments, appear in six
supporting documents organized by functional
area: Education (volume 1), General Government
(volume 2), Health and Human Services (volume
3), Justice and Public Safety (volume 4), Natural
and Economic Resources (volume 5), and Trans-portation
(volume 6).
As required by the State Budget Act, these sup-porting
documents distinguish between continu-ation
requirements (called the base budget) and
recommended adjustments to the base budget.
These documents include the governor’s recom-mended
adjustments to the base budget for the
General Fund, Highway Fund, Highway Trust Fund,
and the Turnpike Authority. Only the base budgets
are presented for budget codes that characterize
special funds, enterprise funds, trust and agency
funds (except for three transportation budget
codes), and service funds.
Introduction
Governor’s recommended budget for the
state
The purpose of this document is to summarize
the governor’s recommended state budget for the
two fiscal years of the 2009-11 biennium. Gover-nor
Perdue’s priorities are listed in her transmittal
letter, which precedes the overview of key recom-mendations
for adjustments to the base budget
(continuation budget). Included in this publication
are recommendations for expenditures from the
General Fund, Highway Fund, and the Highway
Trust Fund. Recommended expenditures for capi-tal
improvements and for reserves, debt service,
and other adjustments are also included. Budget
codes for federal funds and institutional revenue
funds do not appear in the governor’s recom-mended
budget document. This year, however,
information about the impact of the American
Recovery and Reinvestment Act (federal stimulus
funds) on the North Carolina budget is included in
the section titled “Federal Fecovery Funds.”
Summary tables
A summary of General Fund recommendations
by department/budget code for the entire state
budget appears in tables 2 and 3, “Governor’s
Recommended General Fund Budget, 2009-10”
and “Governor’s Recommended General Fund
Budget, 2010-11.” Summaries of recommendations
for expenditures supported by the Highway Fund
and the Highway Trust Fund appear in tables 4 and
5, “Governor’s Recommended Highway Fund and
Highway Trust Fund Budget, 2009-10” and “Gover-nor’s
Recommended Highway Fund and Highway
Trust Fund Budget, 2010-11.”
Fiscal impact and revenue forecast
Also included in this summary volume are an
analysis of the state’s economic and financial out-look
for the upcoming biennium and a compari-
xvi
Integrated with fiscal details in the supplemental
volumes are department missions, goals, fund de-scriptions,
key services supported by each fund or
budget code, costs of services in dollars and staff,
and performance measures. The inclusion of this
budget development and performance manage-ment
information is another step in a multiyear
effort to provide members of the North Carolina
General Assembly and the public with expanded
budget and operational information. These
budgeting elements are intended to improve the
reader’s understanding of why an agency ex-ists,
what the agency does, how much money its
services cost, and how effective its services are.
Ultimately, this information is designed to improve
funding, planning, and management decisions in
state government.
Line item details
Line item base budget details for all budgeted
budget codes and their component funds are
available in a PDF file on the Web site of the Office
of State Budget and Management, www.osbm.
state.nc.us.
1
Economic Priorities
and
Budget Summary
3
•• Helping our most vulnerable populations
by improving health care and mental health
programs, and protecting and supporting
children and seniors.
•• Increasing the safety and security of our com-munities.
•• Developing a budget that is healthy, reason-able,
and fiscally responsible while maintain-ing
the state’s AAA bond rating.
Governor Perdue’s priorities for this budget
include:
•• Creating jobs by investing in infrastructure
projects, expanding workforce development
programs, and promoting the growth of small
business and industry.
•• Ensuring our success in the 21st century by
making a world-class education available to all
North Carolina students.
•• Reorganizing and reforming government to
be open, transparent and accountable to the
citizens of the state.
Economic Priorities and
Budget Summary
for 2009-11
Figure 1
Distribution of the General Fund
Operating Budget, 2009-10
University System
14%
Community
Colleges 5% Public Schools 38%
Debt Service /
Other Reserves 3%
Gen Gov't / Nat'l &
Econ Res 4%
Justice & Public
Safety 11%
Health & Human
Services 25%
4
Percent change Percent change Percent of
Authorized Revised Recommended Rec. 2009-10 vs. Rec. 2009-10 vs. Total
2008-09 2008-09 2009-10 Authorized 2009-10 Revised 2009-10 Oper Budget
Public Schools 8,356 8,210 7,948 -4.9% -3.2% 37.9%
Community Colleges 1,017 965 1,027 1.0% 6.4% 4.9%
University System 2,894 2,727 2,858 -1.2% 4.8% 13.6%
Total Education 12,267 11,902 11,833 -3.5% -0.6% 56.5%
Health & Human Services 4,957 4,764 5,285 6.6% 10.9% 25.2%
Justice & Public Safety 2,210 2,100 2,202 -0.4% 4.9% 10.5%
Gen Gov't / Nat'l & Econ Res 1,070 986 907 -15.2% -8.0% 4.3%
Debt Service / Other Reserves 723 610 727 0.6% 19.2% 3.5%
Total Operating Budget 21,227 20,362 20,954 -1.3% 2.9% 100%
Capital Improvements 129 23 27 -79.1% 17.4%
Total General Fund Budget 21,356 20,385 20,981 -1.8% 2.9%
1. For comparison purposes, the FY 2009-10 recommended appropriation shown in Table 1 for each program area includes the
recommended increases in employee pay, retirement system contributrions, and state health plan premiums that are appropriated in a
statewide reserve and distributed to each agency after enactment of the budget.
Table 1
Recommended General Fund Budget FY 2009-10 1
Compared with Authorized General Fund Appropriations, 2008-09
Appropriations ($ millions)
5
2009-10
Recommended Appropriation Appropriation 2009-10 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Education:
13510 Public Education $ 8,245,341,827 $ ( 251,469,282) $ ( 66,815,990) - $ 1 5,517,871 $ 5 ,165,917 2 3.00 $ ( 297,601,484) $ 7 ,947,740,343 2 3.00
16800 Community Colleges 1,072,571,152 ( 64,063,824) - ( 9.00) 1 8,085,000 2 00,000 8 .00 ( 45,778,824) 1 ,026,792,329 ( 1.00)
160xx University System 3,026,185,255 ( 179,837,189) ( 15,627,121) ( 75.60) 2 3,597,311 4,000,000 2 ( 167,866,999) 2 ,858,318,256 ( 73.60)
Total Education 12,344,098,234 ( 495,370,295) ( 82,443,111) ( 84.60) 5 7,200,182 9,365,917 3 3.00 ( 511,247,307) 1 1,832,850,928 ( 51.60)
General Government:
14100 Administration 78,170,163 (4,402,258) (315,011) (29.00) - 250,000 - (4,467,269) 73,702,894 (29.00)
13300 State Auditor 14,389,111 (1,064,333) (100,266) (5.00) - - - (1,164,599) 13,224,512 (5.00)
14800 Cultural Resources 77,933,037 (4,743,333) (370,444) (17.25) - - - (5,113,777) 72,819,260 (17.25)
14802 Cultural Resources - Roanoke Island 2,095,402 (136,764) (3,588) - - - - (140,352) 1,955,050 -
11000 General Assembly 62,347,066 (3,543,726) (1,141,554) - - - - (4,685,280) 57,661,786 -
13000 Governor's Office 6,616,233 (502,702) - - - - - (502,702) 6,113,531 -
13010 NC Housing Finance 14,608,417 - - - - - - - 14,608,417 -
13900 Insurance 33,824,822 (1,883,772) (296,197) - - - - (2,179,969) 31,644,853 -
13901 Insurance - Worker's Comp. Fund 4,500,000 - (2,500,000) - - - - (2,500,000) 2,000,000 -
13100 Lieutenant Governor 966,706 (12,023) (16,831) - - - - (28,854) 937,852 -
18210 Office of Administrative Hearings 4,266,407 (298,952) - - - - - (298,952) 3,967,455 -
14700 Revenue 91,347,503 (6,426,907) - (31.00) - - - (6,426,907) 84,920,596 (31.00)
13200 Secretary of State 11,854,656 (743,936) - (2.00) - - - (743,936) 11,110,720 (2.00)
18025 State Board of Elections 6,627,101 (403,272) (40,007) - - - - (443,279) 6,183,822 -
13005 State Budget and Management (OSBM) 7,144,221 (550,375) - - - - - (550,375) 6,593,846 -
13085 OSBM-Special Appropriations 4,280,000 (7,000) - - - 1,000,000 - 993,000 5,273,000 -
14160 Controller's Office 24,536,602 (1,469,482) (55,965) (5.75) 600,000 - 5.00 (925,447) 23,611,155 (0.75)
13410 State Treasurer 11,150,002 (660,305) (119,053) (1.00) - - - (779,358) 10,370,644 (1.00)
13412 State Treasurer - Retirement / Benefits 10,804,671 - - - - - - - 10,804,671 -
Total General Government 467,462,120 (26,849,140) (4,958,916) (91.00) 600,000 1,250,000 5.00 (29,958,056) 437,504,064 (86.00)
Health and Human Services:
14410 Central Administration 74,014,863 (23,080,973) (1,505,000) - 950,000 - - (23,635,973) 50,378,890 -
14411 Aging 37,592,841 (190,204) (50,000) (1.00) 1,500,000 - - 1,259,796 38,852,637 (1.00)
14420 Child Development 305,403,137 (718,295) (25,130,955) (1.00) - - - (25,849,250) 279,553,887 (1.00)
14424 Education Services 40,827,434 (2,308,334) (151,679) (35.00) - - - (2,460,013) 38,367,421 (35.00)
14430 Public Health 195,214,007 (9,009,966) (2,074,119) (9.00) 247,000 - - (10,837,085) 184,376,922 (9.00)
14440 Social Services 236,218,110 (9,779,903) (14,575,400) - - - - (24,355,303) 211,862,807 -
14445 Medical Assistance 3,681,276,113 (147,026,271) - - - 403,706 - (146,622,565) 3,534,653,548 -
14446 Child Health 68,789,628 (241,310) - - 4,329,934 - 5.00 4,088,624 72,878,252 5.00
14450 Services for the Blind 11,704,522 (294,450) - - - - - (294,450) 11,410,072 -
14460 Mental Health/DD/SAS 819,613,620 (11,640,378) (21,060,455) (222.00) 12,270,326 3,000,000 174.75 (17,430,507) 802,183,113 (47.25)
14470 Health Service Regulation 19,271,921 (1,258,428) - (2.00) - - - (1,258,428) 18,013,493 (2.00)
14480 Vocational Rehabilitation 46,418,743 (4,323,308) - - - - - (4,323,308) 42,095,435 -
Total Health and Human Services 5,536,344,939 (209,871,820) (64,547,608) (270.00) 19,297,260 3,403,706 179.75 (251,718,462) 5,284,626,477 (90.25)
Justice and Public Safety:
14500 Correction 1,384,910,571 (72,962,507) (6,311,047) (658.00) 10,224,888 929,977 131.00 (68,118,689) 1,316,791,882 (527.00)
14900 Crime Control & Public Safety 43,925,878 (4,291,829) - (22.00) 1,293,000 200,000 - (2,798,829) 41,127,049 (22.00)
12000 Judicial 497,649,235 (25,054,761) (1,466,541) - - - - (26,521,302) 471,127,933 -
12001 Judicial - Indigent Defense 133,881,190 (5,135,174) (5,030,000) (12.50) - - - (10,165,174) 123,716,016 (12.50)
13600 Justice 100,441,147 (6,153,476) - (9.00) - - - (6,153,476) 94,287,671 (9.00)
14060 Juvenile Justice 172,484,415 (17,189,854) (218,393) (51.00) - - - (17,408,247) 155,076,168 (51.00)
Total Justice and Public Safety 2,333,292,436 (130,787,601) (13,025,981) (752.50) 11,517,888 1,129,977 131.00 (131,165,717) 2,202,126,719 (621.50)
Reductions Expansion
Table 2
Governor's Recommended General Fund Budget
2009-10
6
2009-10
Recommended Appropriation Appropriation 2009-10 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Reductions Expansion
Table 2
Governor's Recommended General Fund Budget
2009-10
Natural and Economic Resources:
13700 Agriculture & Consumer Services 65,402,492 (5,175,696) (1,008,594) (26.70) - 500,000 - (5,684,290) 59,718,202 (26.70)
14600 Commerce 46,019,823 (4,550,466) (438,996) (10.00) 504,561 6,967,104 13.00 2,482,203 48,502,026 3.00
14601 Commerce - State Aid 55,129,374 - - - 3,185,944 11,750,000 - 14,935,944 70,065,318 -
14300 Environment and Natural Resources 212,524,097 (18,872,405) (3,201,115) (62.83) 9,482,800 - - (12,590,720) 199,933,377 (62.83)
14301 Clean Water Management Trust 100,000,000 - (25,000,000) - - - - (25,000,000) 75,000,000 -
13800 Labor 19,064,773 (3,212,229) - (38.00) - - - (3,212,229) 15,852,544 (38.00)
Total Natural & Economic Resources 498,140,559 (31,810,796) (29,648,705) (137.53) 13,173,305 19,217,104 13.00 (29,069,092) 469,071,467 (124.53)
14222 Transportation - - - - - - - - - -
Net Agency 21,179,338,288 (894,689,652) (194,624,321) (1,335.63) 101,788,635 34,366,704 361.75 (953,158,634) 20,226,179,655 (973.88)
19600 Capital Improvements - - - - - 27,600,000 - 27,600,000 27,600,000 -
Debt Service:
19420 General Debt Service 670,494,697 (4,000,000) (3,500,000) - - - - (7,500,000) 662,994,697 -
19425 Federal Reimbursement 1,616,380 - - - - - - - 1,616,380 -
Total Debt Service 672,111,077 (4,000,000) (3,500,000) - - - - (7,500,000) 664,611,077 -
Reserves and Adjustments:
19001 Contingency and Emergency Reserve 5,000,000 - - - - - - - 5,000,000 -
19003 Legislative Compensation Reserve - - - - - - - - - -
190xx Teacher Salary Schedule Employees' Reserve 64,726,385 - - - - - - - 64,726,385 -
19004 Salary Adjustment Reserve 4,500,000 (4,500,000) - - - - - (4,500,000) - -
190xx Economic and Recovery Section Reserve - - - - - 1,277,682 15.00 1,277,682 1,277,682 15.00
190xx Health Plan Reduction for Employees who opt
out of State Health Plan
- (25,000,000) - - - - - (25,000,000) (25,000,000) -
190xx 2010 Census Local Promotion - - - - - 750,000 750,000 750,000 -
19013 Job Development Incentive Grants Reserve 27,400,000 - - - - - - - 27,400,000 -
190xx Freeze Longevity Payments - - (173,000,000) - - - - (173,000,000) (173,000,000) -
190xx Administrative Support Reduction Statewide
Reserve
- (3,000,000) - (75.00) - - - (3,000,000) (3,000,000) (75.00)
190xx Budget E-Procurement Receipts - - - - - - - - - -
19043 Health Plan Reserve 125,000,000 - - - - - - - 125,000,000 -
19047 Retirement Rate Adjustment Reserve 21,000,000 - - - - - - - 21,000,000 -
19044 IT Initiative 14,821,416 - - - - - - - 14,821,416 -
19xxx Performance Management System Reserve - - - - 500,000 2,750,000 - 3,250,000 3,250,000 -
19xxx Transparency & Accountability Reserve - - - 500,000 - - 500,000 500,000 -
Total Reserves and Adjustments 262,447,801 (32,500,000) (173,000,000) (75.00) 1,000,000 4,777,682 15.00 (199,722,318) 62,725,483 (60.00)
Total $ 22,113,897,166 $ (931,189,652) $ (371,124,321) (1,410.63) $ 102,788,635 $ 66,744,386 376.75 $ (1,132,780,952) $ 20,981,116,215 (1,033.88)
7
2010-11
Recommended Appropriation Appropriation 2010-11 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Education:
13510 Public Education $ 8,358,798,223 $ ( 254,111,425) $ ( 11,068,369) - $ 1 5,517,871 $ - 2 3.00 $ ( 249,661,923) $ 8 ,109,136,300 2 3.00
16800 Community Colleges 1,114,034,594 ( 64,380,639) - ( 9.00) 1 8,492,300 - 8 .00 ( 45,888,339) 1 ,068,146,255 ( 1.00)
160xx University System 3,100,871,575 ( 177,306,670) ( 18,463,885) ( 121.80) 2 3,597,311 - 2 ( 172,173,244) 2 ,928,698,331 ( 119.80)
Total Education 12,573,704,392 ( 495,798,734) ( 29,532,254) ( 130.80) 5 7,607,482 - 3 3.00 ( 467,723,506) 1 2,105,980,886 ( 97.80)
General Government:
14100 Administration 78,362,881 (4,558,568) (315,011) (29.00) - - - (4,873,579) 73,489,302 (29.00)
13300 State Auditor 14,405,383 (1,064,333) (100,266) (5.00) - - - (1,164,599) 13,240,784 (5.00)
14800 Cultural Resources 79,329,609 (4,743,333) (370,444) (17.25) - - - (5,113,777) 74,215,832 (17.25)
14802 Cultural Resources - Roanoke Island 2,095,402 (136,764) (3,588) - - - - (140,352) 1,955,050 -
11000 General Assembly 64,056,544 (3,700,916) (984,364) - - - - (4,685,280) 59,371,264 -
13000 Governor's Office 6,622,879 (503,167) - - - - - (503,167) 6,119,712 -
13010 NC Housing Finance 14,608,417 - - - - - - - 14,608,417 -
13900 Insurance 33,887,006 (1,883,772) (296,197) - - - - (2,179,969) 31,707,037 -
13901 Insurance - Worker's Comp. Fund 4,500,000 - (2,500,000) - - - - (2,500,000) 2,000,000 -
13100 Lieutenant Governor 966,706 (12,023) (16,831) - - - - (28,854) 937,852 -
18210 Office of Administrative Hearings 4,279,242 (298,952) - - - - - (298,952) 3,980,290 -
14700 Revenue 91,440,473 (6,426,907) - (31.00) - - - (6,426,907) 85,013,566 (31.00)
13200 Secretary of State 11,928,530 (743,936) - (2.00) - - - (743,936) 11,184,594 (2.00)
18025 State Board of Elections 6,630,894 (403,272) (40,007) - - - - (443,279) 6,187,615 -
13005 State Budget and Management (OSBM) 7,147,928 (550,634) - - - - - (550,634) 6,597,294 -
13085 OSBM-Special Appropriations 4,280,000 (7,000) - - - - - (7,000) 4,273,000 -
14160 Controller's Office 24,568,908 (1,469,482) (55,965) (5.75) 1,200,000 - 10.00 (325,447) 24,243,461 4.25
13410 State Treasurer 11,163,790 (660,305) (119,053) (1.00) - - - (779,358) 10,384,432 (1.00)
13412 State Treasurer - Retirement / Benefits 10,804,671 - - - - - - - 10,804,671 -
Total General Government 471,079,263 (27,163,364) (4,801,726) (91.00) 1,200,000 - 10.00 (30,765,090) 440,314,173 (81.00)
Health and Human Services:
14410 Central Administration 74,482,593 (23,080,973) - - 950,000 - - (22,130,973) 52,351,620 -
14411 Aging 37,594,640 (190,204) (50,000) (1.00) 1,500,000 - - 1,259,796 38,854,436 (1.00)
14420 Child Development 305,417,178 (718,295) (3,800,000) (1.00) - - - (4,518,295) 300,898,883 (1.00)
14424 Education Services 40,879,342 (2,308,334) (151,679) (35.00) - - - (2,460,013) 38,419,329 (35.00)
14430 Public Health 198,230,503 (10,150,097) (2,074,119) (9.00) 247,000 - - (11,977,216) 186,253,287 (9.00)
14440 Social Services 234,498,543 (9,779,903) (6,530,294) - - - - (16,310,197) 218,188,346 -
14445 Medical Assistance 3,933,921,911 (172,955,145) - - - - - (172,955,145) 3,760,966,766 -
14446 Child Health 68,789,628 (341,373) - - 16,058,748 - 5.00 15,717,375 84,507,003 5.00
14450 Services for the Blind 11,763,464 (353,391) - - - - - (353,391) 11,410,073 -
14460 Mental Health/DD/SAS 834,943,177 (18,380,526) (31,662,312) (345.50) 12,270,326 - - (37,772,512) 797,170,665 (345.50)
14470 Facility Services 19,277,259 (1,258,428) - (2.00) - - - (1,258,428) 18,018,831 (2.00)
14480 Vocational Rehabilitation 46,762,707 (4,654,214) - - - - - (4,654,214) 42,108,493 -
Total Health and Human Services 5,806,560,945 (244,170,883) (44,268,404) (393.50) 31,026,074 - 5.00 (257,413,213) 5,549,147,732 (388.50)
Justice and Public Safety:
14500 Correction 1,406,791,264 (95,905,014) (989,047) (658.00) 12,990,156 9,757 151.00 (83,894,148) 1,322,897,116 (507.00)
14900 Crime Control & Public Safety 44,067,870 (4,291,829) - (22.00) 1,293,000 - - (2,998,829) 41,069,041 (22.00)
12000 Judicial 507,638,940 (25,054,761) (884,043) - - - - (25,938,804) 481,700,136 -
12001 Judicial - Indigent Defense 132,320,396 (5,135,174) - (12.50) - - - (5,135,174) 127,185,222 (12.50)
13600 Justice 101,047,019 (6,348,918) (215,000) (9.00) - - - (6,563,918) 94,483,101 (9.00)
14060 Juvenile Justice 172,651,108 (17,189,854) (218,393) (51.00) - - - (17,408,247) 155,242,861 (51.00)
Total Justice and Public Safety 2,364,516,597 (153,925,550) (2,306,483) (752.50) 14,283,156 9,757 151.00 (141,939,120) 2,222,577,477 (601.50)
Reductions Expansion
Table 3
Governor's Recommended General Fund Budget
2010-11
8
2010-11
Recommended Appropriation Appropriation 2010-11 Net
Budget Continuation Supported Supported Net Recommended Position
Code Function Budget Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
Reductions Expansion
Table 3
Governor's Recommended General Fund Budget
2010-11
Natural and Economic Resources:
13700 Agriculture & Consumer Services 65,638,839 (5,175,696) (1,008,594) (26.70) - - - (6,184,290) 59,454,549 (26.70)
14600 Commerce 46,028,986 (4,550,466) (438,996) (10.00) 504,561 3,000,000 3.00 (1,484,901) 44,544,085 (7.00)
14601 Commerce - State Aid 55,129,374 - - - 3,185,944 - - 3,185,944 58,315,318 -
14300 Environment and Natural Resources 214,924,435 (18,872,405) (3,201,115) (62.83) 9,482,800 - - (12,590,720) 202,333,715 (62.83)
14301 Clean Water Management Trust 100,000,000 - (25,000,000) - - - - (25,000,000) 75,000,000 -
13800 Labor 19,092,834 (3,212,229) - (38.00) - - - (3,212,229) 15,880,605 (38.00)
Total Natural & Economic Resources 500,814,468 (31,810,796) (29,648,705) (137.53) 13,173,305 3,000,000 3.00 (45,286,196) 455,528,272 (134.53)
14222 Transportation - - - - - - - - - -
Net Agency 21,716,675,665 (952,869,327) (110,557,572) (1,505.33) 117,290,017 3,009,757 202.00 (943,127,125) 20,773,548,540 (1,303.33)
19600 Capital Improvements - - - - - - - - - -
Debt Service:
19420 General Debt Service 739,878,445 (4,000,000) - - - - - (4,000,000) 735,878,445 -
19425 Federal Reimbursement 1,616,380 - - - - - - - 1,616,380 -
Total Debt Service 741,494,825 (4,000,000) - - - - - (4,000,000) 737,494,825 -
Reserves and Adjustments:
19001 Contingency and Emergency Reserve 5,000,000 - - - - - - - 5,000,000 -
19003 Legislative Compensation Reserve - - - - - - - - - -
19004 Salary Adjustment Reserve 4,500,000 (4,500,000) - - - - - (4,500,000) - -
19xxx Transparency & Accountability Reserve - - - - 500,000 - - 500,000 500,000 -
19013 Job Development Incentive Grants Reserve 27,400,000 - - - - - - - 27,400,000 -
190xx Teacher Salary Schedule Employees' Reserve 56,051,665 - - - - - - - 56,051,665
190xx Freeze Longevity Payments - - (177,800,000) - - - - (177,800,000) (177,800,000) -
19019 Gang Initiative - - - - - - - - - -
19043 Health Plan Reserve 228,000,000 - - - - - - - 228,000,000 -
190xx Administrative Support Reduction Statewide
Reserve
- (4,000,000) - (100.00) - - - (4,000,000) (4,000,000) (100.00)
190xx Budget E-Procurement Receipts - (10,000,000) - - (10,000,000) (10,000,000)
190xx Economic and Recovery Section Reserve - 1,062,872 15.00 1,062,872 1,062,872 15.00
19047 Retirement Rate Adjustment Reserve 21,000,000 - - - - - - - 21,000,000 -
190xx Health Plan Reduction for E"ee's" opt out of the - (25,000,000) - - - - - (25,000,000) (25,000,000) -
19044 IT Initiative 14,821,416 - - - - - - - 14,821,416 -
19xxx Performance Management System Reserve - - - - 500,000 500,000 - 1,000,000 1,000,000 -
Total Reserves and Adjustments 356,773,081 (43,500,000) (177,800,000) (100.00) 1,000,000 1,562,872 15.00 (218,737,128) 138,035,953 (85.00)
Total $ 22,814,943,571 $ (1,000,369,327) $ (288,357,572) (1,605.33) $ 118,290,017 $ 4,572,629 217.00 $ (1,165,864,253) $ 21,649,079,318 (1,388.33)
9
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)
)
)
)
)
)
)
)
))
)
)
Table 4
Governor's Recommended Highway Fund and Highway Trust Fund Budget
2009-10
Reductions Expansion
2009-10
Recommended Appropriation Appropriation 2009-10 Net
Continuation Supported Supported Net Approved Position
Function Appropriation Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
DOT Administration 86,303,924 (3,735,605) (1,757,797) (6.00) - - - (5,493,402 80,810,522 (6.00)
Division of Highways
Administration 34,905,207 (1,362,581) (603,643) (16.00) - - - (1,966,224 32,938,983 (16.00)
Construction 122,481,404 (2,660,000) - - 11,689,860 - - 9,029,860 131,511,264 -
Maintenance 897,149,144 (51,965,269) (25,835,269) - - - - (77,800,538 819,348,606 -
Planning and Research 4,055,402 - - - - - - 4,055,402 -
OSHA Program 425,000 (52,208) (17,403) - - - (69,611) 355,389 -
Ferry Operations 28,765,439 (2,155,497) - - 3,116,267 480,000 79.00 1,440,770 30,206,209 79.00
State Aid
Municipalities 84,481,404 - - - 2,589,860 - 2,589,860 87,071,264 -
Public Transportation 96,544,229 (16,366,078) (8,582,189) - - (24,948,267 71,595,962 -
Airports 19,349,592 (1,128,445) (871,555) - - (2,000,000 17,349,592 -
Railroads 17,101,153 - - - - - 17,101,153 -
Governor's Highway Safety Program 351,779 - - - - - 351,779 -
Division of Motor Vehicles 105,621,605 (2,083,008) (2,166,603) - 264,359 96,460 4.00 (3,888,792 101,732,813 4.00
Other State Agencies 297,178,677 (7,910,922) (3,174,280) - 590,000 - (10,495,202 286,683,475 -
Reserves and Transfers 4,222,758 (8,035,171) - - 6,200,000 - - (1,835,171 2,387,587 -
Capital Improvements - - - -
Total Highway Fund 1,798,936,717 (97,454,784) (43,008,739) (22.00) 24,450,346 576,460 83.00 (115,436,717) 1,683,500,000 61.00
Administration 48,602,400 (7,510,080) - - - - - (7,510,080 41,092,320 -
Construction
Intrastate System 445,444,392 (92,770,076) - - - - - (92,770,076 352,674,316 -
Urban Loop System 148,271,856 (37,512,354) - - - - - (37,512,354 110,759,502 -
Secondary Roads 67,510,836 (9,733,745) - - - - - (9,733,745 57,777,091 -
State Aid to Munipalities 49,627,687 (9,733,745) - - - - - (9,733,745 39,893,942- -
Bonds -
Bond Redemption 54,065,000 - - - - - - - 54,065,000
Bond Interest 28,666,000 - - - - - - - 28,666,000-
NC Turnpike Authority 64,000,000 - - - - - - - 64,000,000
Transfer to the General Fund 108,561,829 - - - - - - - 108,561,829 -
Total Highway Trust Fund 1,014,750,000 (157,260,000) - - - - - (157,260,000) 857,490,000 -
10
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)
)
)
)
)
)
)
)
))
)
Table 5
Governor's Recommended Highway Fund and Highway Trust Fund Budget
2010-11
Reductions Expansion
2010-11
Recommended Appropriation Appropriation 2010-11 Net
Continuation Supported Supported Net Approved Position
Function Appropriation Recurring Nonrecurring Positions Recurring Nonrecurring Positions Change Appropriation Change
DOT Administration 86,354,752 (3,335,662) (1,757,817) (6.00) 636,000 - - (4,457,479 81,897,273 (6.00)
Division of Highways
Administration 34,963,043 (1,369,863) (600,003) (16.00) - - - (1,969,866 32,993,177 (16.00)
Construction 121,214,183 (2,660,000) - - 12,086,368 - - 9,426,368 130,640,551 -
Maintenance 897,149,144 (57,139,505) (52,345,047) - - - - (109,484,552 787,664,592 -
Planning and Research 4,055,402 - - - - - - 4,055,402 -
OSHA Program 425,000 (52,208) (17,403) - - - (69,611) 355,389 -
Ferry Operations 28,765,439 (2,155,497) - - 3,116,267 384,000 79.00 1,344,770 30,110,209 79.00
State Aid
Municipalities 83,214,183 - - - 2,986,368 - 2,986,368 86,200,551 -
Public Transportation 96,544,229 (16,426,078) (8,486,189) - - (24,912,267 71,631,962 -
Airports 19,291,543 (1,125,523) (874,477) - - (2,000,000 17,291,543 -
Railroads 17,101,153 - - - - - 17,101,153 -
Governor's Highway Safety Program 352,325 - - - - - 352,325 -
Division of Motor Vehicles 105,732,881 (2,083,008) (2,166,603) - 264,359 - 4.00 (3,985,252 101,747,629 4.00
Other State Agencies 299,106,995 (7,910,922) (3,149,652) - 810,000 - (10,250,574 288,856,421 -
Reserves and Transfers 4,222,758 (8,260,935) - - 11,600,000 - - 3,339,065 7,561,823 -
Capital Improvements - -
Total Highway Fund 1,798,493,030 (102,519,201) (69,397,191) (22.00) 31,499,362 384,000 83.00 (140,033,030) 1,658,460,000 61.00
Administration 50,652,480 (8,278,560) - - - - - (8,278,560 42,373,920 -
Construction
Intrastate System 471,440,180 (101,984,625) - - - - - (101,984,625 369,455,555 -
Urban Loop System 159,678,513 (41,238,334) - - - - - (41,238,334 118,440,179 -
Secondary Roads 71,231,921 (10,700,566) - - - - - (10,700,566 60,531,355 -
State Aid to Munipalities 52,250,080 (10,700,565) - - - - - (10,700,565 41,549,515 -
-
Bonds -
Bond Redemption 54,030,000 - - - - - - - 54,030,000
Bond Interest 25,962,750 - - - - - - - 25,962,750-
NC Turnpike Authority 99,000,000 - - - - - - - 99,000,000
Transfer to the General Fund 73,214,076 (367,350) - - - - - (367,350) 72,846,726 -
Total Highway Trust Fund 1,057,460,000 (173,270,000) - - - - - (173,270,000) 884,190,000 -
11
Table 6
Recommended General Fund Availability and Appropriations, 2009-11
2009-10 2010-11
Description Recommended Recommended
Revenue:
Tax:
Income (Individual & Corporate) $ 1 1,184,700,000 $ 1 1,794,900,000
Sales and Use 5 ,038,400,000 5 ,400,300,000
Other Tax 2 ,353,500,000 2 ,571,900,000
Total Tax 1 8,576,600,000 1 9,767,100,000
Nontax 7 39,234,764 7 52,653,080
Transfers 1 26,100,000 9 1,100,000
Total Revenue 19,441,934,764 2 0,610,853,080
Federal Recovery Funds:
FMAP Assistance 1 ,003,677,475 5 00,711,010
Fiscal Stabilization -- Education 5 80,966,000 5 80,966,000
Fiscal Stabilization -- General Purpose 1 29,261,500 1 29,261,500
Subtotal Federal Recovery Funds 1 ,713,904,975 1 ,210,938,510
Total Availability 21,155,839,739 2 1,821,791,590
Appropriations:
Recommended Continuation Budget 2 2,113,897,166 2 2,814,943,571
Recommended Budget Reductions (1,302,313,973) (1,288,726,899)
Recommended Expansion Budget 1 69,533,021 1 22,862,646
Total Recommended Appropriations 2 0,981,116,215 2 1,649,079,318
Total Ending Balance 174,723,525 1 72,712,272
Transfer Funds to Fiscal Responsibility Reserve (174,723,525) -
Remaining Balance $ - $ 1 72,712,272
16
12
Table 7
Recommended Highway Fund Availability and Appropriations
2009-11
2009-10 2010-11
Recommended Recommended
Availability
Beginning Credit Balance:
Unappropriated Balance from FY 2008-09 $ - $ -
Anticipated Reversions from FY 2008-09 - -
Anticipated Overcollections from FY 2008-09 - -
Anticipated Beginning Unreserved Credit Balance - -
Recommended Budgeted Revenue:
Tax Revenue 1,075,140,000 1 ,038,470,000
Non-tax Revenue 6 08,360,000 6 19,990,000
Total Highway Fund Revenue 1 ,683,500,000 1 ,658,460,000
Total Availability 1 ,683,500,000 1 ,658,460,000
Recommended Appropriations:
Original Certified Budget 1 ,798,936,717 1 ,798,493,030
Recommended Reductions (140,463,523) (171,916,392)
Recommended Expansion 2 5,026,806 3 1,883,362
Total Appropriations Recommended 1 ,683,500,000 1 ,658,460,000
Total Ending Balance $ - $ -
13
Table 8
Recommended Highway Trust Fund Availability and Appropriations
2009-11
2009-10 2010-11
Recommended Recommended
Availability
Beginning Credit Balance:
Unappropriated Balance from FY 2008-09 $ - $ -
Anticipated Reversions from FY 2008-09 - -
Anticipated Overcollections from FY 2008-09 - -
Anticipated Beginning Unreserved Credit Balance - -
Recommended Budgeted Revenue:
Tax Revenue 7 64,740,000 7 89,500,000
Non-tax Revenue 9 2,750,000 9 4,690,000
Total Highway Trust Fund Revenue 8 57,490,000 8 84,190,000
Total Availability 8 57,490,000 8 84,190,000
Recommended Appropriations:
Original Certified Budget 1 ,014,750,000 1 ,057,460,000
Recommended Reductions (157,260,000) (173,270,000)
Recommended Expansion - -
Total Appropriations Recommended 857,490,000 884,190,000
Total Ending Balance $ - $ -
15
Major Expansion Budget
Recommendations
Fiscal Responsibility
Education
General Government
Health and Human Services
Economic Development and Infrastructure
Justice and Public Safety
Natural and Economic Resources
Transportation
Capital Improvements
Teachers and State Employees
17
•• It provides $1 million to upgrade the state
web portal and accountability websites to
make government services more accessible
and customer-friendly to the public.
•• In this tough environment, the budget appro-priates
$2.3 million for the Office of Economic
Recovery and Investment to ensure North
Carolina maximizes the use of available federal
recovery funds.
Requires us to live within our means
•• This budget reduces the total General Fund
budget (including federal recovery monies)
by $360 million or 1.8%, even after taking over
local Medicaid expenses.
•• Spending in this budget is 3.2% less per capita
than in FY 2008-09.
•• The state takes on no additional indebtedness
in FY 2009-10.
Governor Perdue recommends a balanced and
reasoned budget that:
Makes government more effective and efficient
•• This budget identifies $2.6 billion in General
Fund budget reductions ($1.3 billion each fis-cal
year).
•• It looks for savings by focusing on reducing or
eliminating duplicative, costly, inefficient or
nonessential programs and services.
•• This year’s budget development process tran-sitions
from our current incremental budget-ing
approach to one that focuses more on
results.
Provides transparency and accountability
•• This budget invests $4.25 million to create
and maintain a budget and performance man-agement
system.
Fiscal Responsibility
Major Recommendations
18
Figure 2
Average Daily Membership Budgeted
NC Public Schools
1,150,000
1,200,000
1,250,000
1,300,000
1,350,000
1,400,000
1,450,000
1,500,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Percent Change
ADM Percent Change
Education
Major Recommendations
•• Appropriate $6.7 million to continue the drop-out
prevention grant initiative, which address-es
issues such as truancy, academic failure, and
school transition.
•• Increase funding for the statewide program
that provides tailored and sustained support
to struggling schools and districts to improve
student achievement.
•• Provide full funding for additional 12 Learn
and Earn schools scheduled to open in the
2009-10 school year in order to improve
graduation rates, student performance, and
competitiveness.
•• Provide an LEA flexibility reduction to be allo-cated
based upon average daily membership.
This reduction shall not directly impact class-room
services and LEAs are strongly encour-aged
to use funds received from the federal
recovery act to mitigate this reduction.
Public Education
Governor Perdue’s budget protects K-12 with total
public education spending (including federal
recovery dollars) greater in 2009-10 than 2008-09,
even though enrollment is expected to be lower
by 0.79%. Major budget recommendations are
listed below:
•• Provide $4.7 million to investigate and pilot
diagnostic assessments in the elementary
grades to ensure that basic deficiencies in
reading and math are addressed before stu-dents
move to middle school, to replace the
standard course of study with a 21st century
curriculum, to develop a plan to restruc-ture
the ABCs Accountability System, and to
replace the current end of grade and end of
course with assessments aligned with the new
curriculum and using nationally normed as-sessments
wherever possible.
See left axis for bars, right for line.
Source: Departmemt of Public Instruction, Financial and Business Services School allotment section.
Average Daily Membershil is the number of days in membership for all students divided by the number of school
days in a particular term (school month or school year).
19
Figure 3
Enrollment in Community College System
Curriculum, Continuing Education, Basic Skills
Budgeted FTE
0
50,000
100,000
150,000
200,000
250,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
0%
2%
4%
6%
8%
10%
12%
Percent Change
FTE Percent Change
Provide $3 million to fund 20 grants to colleges
for programs serving areas of major need
in technical fields, including transportation,
engineering, industrial, military, construction,
and green technology sectors.
Appropriate $2.5 million from the American
Recovery and Reinvestment Act to
implement JobSupport to meet the child care,
tuition, and transportation needs of displaced
workers while they pursue retraining.
•• Approve a recurring $5 million to address
equipment and technology needs at the
colleges to reduce program waiting lists and
meet the training needs.
•• Appropriate an enrollment growth reserve of
$3 million to assist community colleges expe-riencing
an anticipated enrollment growth of
5% or more above the prior year.
•• Provide a community college flexibility reduc-tion.
The reductions shall not directly impact
retraining for displaced workers or course of-ferings
to high school students.
•• Adjust the budget for NCCCS Office salaries
to 97% and college salaries to 98%, to more
closely match the actual salary expenditures.
•• Adjust the budget for DPI salaries and LEA
benefits to 97% to more closely match the
actual salary and benefit expenditures.
•• Reduce funding for textbooks on a nonrecur-ring
basis due to a delay in the middle and
high school math textbook adoption. LEAs
will continue to have funds available to pur-chase
the remaining textbooks.
•• Adjust the financing for school bus replace-ment
from three years to four years, saving
$7.5 million annually. This will not reduce the
number of buses scheduled for replacement
over the biennium.
Community Colleges
The Governor’s community college budget
focuses on strategic areas to ensure workforce
development and create jobs for the future. Total
funding for the NCCCS is greater in 2009-10 than in
2008-09. Major budget recommendations include:
•• JobsNOW:
Appropriate $4.8 million to provide 65
additional health faculty targeted in areas
with a high shortage and a waiting list of
students.
Source: NCCCS System Office
Budgeted FTE (full time equivalent enrollment) is the sum of curriculum, continuing education, and basic skills FTE. It is computed as
the three-year average or the prior year’s enrollment for each college, whichever is higher. The community colleges’ enrollments are
aggregated for the entire Community College System. (The three-year average creates slight differences between budgeted and actual
FTE; recently, this systemwide difference has been less that 100.)
20
School of Medicine’s ability to provide care for
the indigent patients of eastern North Caro-lina.
•• Provide a UNC GA flexibility reduction of
approximately 5% for most of UNC GA. The
UNC System President and the UNC Board of
Governors have the flexibility to implement
this reduction.
•• Provide a UNC campus flexibility reduction
of approximately 3.6%. The campuses will
use this flexibility to make reductions in areas
based upon the best interests of each campus.
•• Adjust the budget for UNC GA salaries to 97%
and UNC campus salaries to 98%, to more
closely match the actual salary expenditures.
•• Reduce UNC Hospitals transfer for 2 years due
to their large fund balance.
•• Reduce the Legislative Tuition Grant budget
consistent with the reduction for the UNC
campuses. The need-based financial aid pro-gram
for private colleges, the State Contrac-tual
Scholarship Fund, is held harmless.
•• Reduce supplemental multi-campus funding
by approximately 12.8%. Colleges will con-tinue
to receive FTE funding for enrollment
generated at these sites.
•• Restructure continuing education fee rates to
a new sliding scale based upon length of each
course. Fee increases will not reduce access to
training for dislocated workers.
University System
The Governor’s budget continues to provide
university access for North Carolinians at a cost
that is reasonable and affordable by fully funding
enrollment growth and need-based financial aid,
while not recommending an increase in tuition.
Highlights of the budget recommendations are
listed below.
•• Provide full funding for the UNC Need-Based
Financial Aid request of $23.4 million to con-tinue
the expansion of this UNC grant program
to ensure that all eligible students shall receive
a grant and will hold recipients harmless from
the increases in the cost of education.
•• Approve $4 million to support the ECU Brody
Source: UNC General Administration
Budget FTE is calculated by converting budgeted student credit hours (fall and spring) into the measure of regular
term full time equivalent students (FTEs).
Figure 4
Enrollment in the University System
Budgeted FTE
0
50,000
100,000
150,000
200,000
250,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Percent Change
Enrollment Units (FTE) Percent Change
21
Sustaining Services for State Government
Operations
•• Restore funding for the State Parking System
to ensure parking services are maintained in
the downtown State Government Complex,
and add $1.2 million to support recurring
resources needed to stabilize the HR/Payroll
system.
Preserving Core Agency Functions
•• Ensure that core agency functions are main-tained
by limiting reductions primarily to
operating efficiencies and payroll reductions
that reflect actual expenditure needs.
Governor Perdue’s General Government budget
includes:
Supporting Our Military Members
•• Sustain the $1 million funding for military mo-rale
and welfare grants to military installations.
These grants fund community service and
quality of life programs for military members
and their families in North Carolina.
Ensuring Justice for Sterilization Victims
•• Allocate $250,000 to begin planning efforts
for the establishment of a foundation that will
provide justice and compensate those who
were forcibly sterilized by the state.
General Government
Major Recommendations
22
providing them with a medical home and
coordinating the receipt of free or low cost
health care services through Community
Care of North Carolina (CCNC), hospitals,
local health departments, and locally based
indigent care programs.
Supporting older adults and the families who
care for them. Specific initiatives include:
•• Additional funds ($1 million) in the Home
and Community Care Block Grant Program
(HCCBG) targeted at removing people on the
waiting list for in-home personal care. The
Governor’s budget also restores the avail-ability
of the $2 million that were appropri-ated
by the General Assembly during the
2008 Session but not allocated in the current
The Governor’s proposed budget for health and
human services targets scarce expansion funding
to protect and assist our State’s most vulnerable
populations. Her priorities include:
Increasing access to health care for working
families and the uninsured. Initiatives include:
•• Expand enrollment in the State Children’s
Health Insurance Program (SCHIP) over the
biennium to approximately 16,000 additional
children from families making under 200% of
the federal poverty level. Enrollment is pro-jected
to be 153,755 children at the end of
June 2011.
•• Provide additional funds ($950,000) for Health
Net, a care management program that assists
low income, uninsured North Carolinians by
Health and Human Services
Major Recommendations
Source for Expenditures: BD701 Budget Reports, Budget Code 14445, Fund 1310
Source for Eligibility: Medicaid Eligibility Report EJA752 - SFY 2007
Figure 5
North Carolina Medicaid Expenditures
Eligible Residents
-
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
2003-04 2004-05 2005-06 2006-07 2007-08
1,400,000
1,450,000
1,500,000
1,550,000
1,600,000
1,650,000
1,700,000
1,750,000
Medicaid Eligible NC Residents
Expenditures Eligibility
23
fiscal year due to the budget shortfall. These
additional funds can be used to further reduce
the waiting list for all HCCBG services, includ-ing
home-delivered meals, congregate meals,
in-home personal care, respite care, adult care
services, and transportation.
•• Recurring funds of $500,000 for Project
C.A.R.E., a nationally recognized consumer-directed
respite care program that provides
comprehensive support to caregivers of
persons with dementia. Further support for
families caring for a person with dementia is
provided through a proposed caregiver tax
credit.
Improving institutional and community-based
resources that provide services to the mentally
ill. Initiatives include:
•• An additional $12 million to continue the
investment in the local crisis services system
by purchasing 111 local inpatient psychiatric
hospital beds. Local inpatient care affords cli-ents
opportunities to receive services in their
home community, allowing better integration
of care; and allowing state psychiatric hospi-tals
to begin focusing their mission on long
term care.
•• Funds to enhance training for employees at
state facilities to improve the quality of care
provided to clients and to expand the Psychi-atric
Nurse Practitioner Program.
•• Additional funds of approximately $30 million
in the continuation budget to shore up line-items
that have been historically underbud-geted
in the Division of Mental Health, Devel-opmental
Disabilities, and Substance Abuse.
The Governor’s proposed budget for health and
human services also requires reductions totaling
$274 million. Over 85% of the department’s bud-get
is spent on aid and public assistance, making it
impossible for this reduction not to affect pro-grams
and services delivered to our state’s citizens.
However, every attempt was made to minimize
the impact on our neediest residents and to target
programs where reductions would not impact
service levels. Agencies were asked to work more
efficiently to minimize the impact of operating
budget reductions, and use federal funds to re-place
state funds wherever possible.
Major reductions include:
•• $101 million from freezing the provider infla-tionary
increase in the Medicaid budget .
•• $22.5 million from budgeting salaries at less
than 100%.
•• $20.8 million from reducing prescription drug
costs in Medicaid.
24
•• Approve $5 million for evidence-based grants
that focus on gang prevention, treatment,
intervention, and re-entry programs.
•• Provide $1.5 million for additional Juvenile
Court Counselors to ensure the effective su-pervision
of adjudicated youth.
Enhancing supervision of offenders
•• Add $2.4 million each year to improve re-cruitment
and retention of Probation/Parole
Officers.
•• Appropriate $8.8 million for FY 2009-10 and
$10.6 million for FY 2010-11 for additional Pro-bation/
Parole Officers, supervisors, and train-ers
to enhance the Department of Correction’s
ability to meet current offender supervision
needs through adequate staffing and reduced
span of control.
The Governor’s proposed budget includes the
following recommendations in Justice and Public
Safety:
Addressing gangs comprehensively through
Federal Recovery Funds
•• Allocate $200,000 each year to establish a
statewide gang task force to develop a com-prehensive
plan and ensure a well-coordinat-ed
statewide enforcement program.
•• Provide $1.8 million to expand the GangNet
intelligence information database to link the
entire state.
•• Allocate $6 million for a Gang Prevention and
Intervention Pilot Program that will focus on
youth at-risk for gang involvement and those
who are already associated with gangs and
gang activity.
Justice and Public Safety
Major Recommendations
25
Maximizing Resources for Infrastructure
Improvements
•• Add $10 million to enable local governments
to leverage loans made available through
federal recovery funding for water and sewer
infrastructure projects.
•• Allocate $9.5 million in state appropriation
each year to leverage $95 million in federal
funding that will provide low-interest loans for
water supply and wastewater infrastructure
improvements.
Restructuring Agency Functions
•• Save $377,000 by eliminating the Office of
Environmental Education and transferring the
curriculum development functions to various
education agencies.
•• Save $200,000 by eliminating dedicated fund-ing
for the Neuse River Rapid Response Team,
instead utilizing existing resources across the
state to implement this function statewide.
Promoting Our State
•• Invest $2 million to promote North Carolina
as a business destination, expand the tourism
and film industry, and market North Carolina
grown products.
The Governor recommends the following
adjustments for this bienium:
Fostering and Supporting Community Growth
Strategies
•• Appropriate $3.3 million each year to trans-form
the Main Street Program into a more
comprehensive economic development tool,
and drive regional job creation through the
development of growth plans and awarding of
grants for customized local projects in “micro-politan”
communities.
•• Provide $3.2 million each year to restore fund-ing
for the Regional Economic Development
Commissions so they can continue to promote
economic development and tourism in the
communities they serve throughout North
Carolina.
Growing North Carolina Businesses and Jobs
•• Appropriate $3.75 million to increase the com-petitive
position of small businesses, strength-en
economic development opportunities for
the homeland security and national defense
industries, and expand growth of North
Carolina’s aerospace industry. In addition, $5
million in federal recovery funds will support
efforts to encourage the development of and
investment in green technologies in the state.
Natural and Economic Resources
Major Recommendations
26
•• Invest $5.3 million and $8.8 million, respec-tively,
for each year of the biennium in receipt
funds for information technology projects that
will facilitate combined motor vehicle registra-tion
and collection of county property taxes by
the Division of Motor Vehicles.
•• Dedicate $1.5 billion or 43% of total program
resources each year of the biennium for con-struction
related activities. Reductions of $200
million (12%) in 2009-10 and $178 million
(10%) in 2010-11 over the 2008-09 authorized
level are recommended.
•• Provide $819 million (23%) in 2009-10 and
$787 million (22%) in 2010-11 of total program
resources for highway maintenance activities
throughout the state. Reduced appropriations
in the amount of $125 million (13%) in 2009-
10 and $156 million (17%) in 2010-11 over the
2008-09 authorized level are recommended.
•• Provide $156 million in 2009-10 and $167 mil-lion
in 2010-11 for multi-modal transportation
activities throughout the state that include
public transportation, aviation, and rail pro-grams.
Program reductions of $7.8 million
or 7% are recommended for each year of the
biennium over the 2008-09 authorized level.
•• Approve $127 million in funding each year of
the biennium for state aid to municipalities
(Powell Bill) for improvements to the municipal
street system. Reductions in the amount of
$20 million or 14% are recommended for each
year of the biennium to adjust appropriations
as statutorily required.
Governor Perdue is extremely committed to in-vesting
funds in infrastructure projects to facilitate
economic growth. Restoring and maintaining the
state’s transportation infrastructure and promot-ing
public transit initiatives are key components.
Total funding of $3.6 billion is recommended in
support of North Carolina’s Transportation Pro-gram
for each year of the 2009-11 biennium. Over
70% of the funding is recommended for construc-tion,
maintenance, and public transportation
activities throughout the state.
The governor’s budget recommendations also
include funds for initiatives aimed at making gov-ernment
operate more effectively and efficiently
through investment in information technology
projects that streamline program operations.
Two of the major sources of revenue (motor fuel
tax and highway use tax) that support the trans-portation
program have been severely impacted
by the current economic slowdown. As a result,
many programs will face reductions in appropria-tions
for the biennium. The reductions are re-quired
to align appropriations with the estimated
revenues that support the program.
Figures 7 - 10 show the distribution of funding
sources and appropriations for North Carolina‘s
Transportation Program for both years of the bien-nium.
Major Transportation Program Recommenda-tions:
•• Provide $64 million in 2009-10 and $99 million
in 2010-11 for GAP funding for NC Turnpike
Authority projects authorized by the General
Assembly by continuing the reduction of the
annual transfer from the Highway Trust Fund
to the General Fund.
Transportation
Major Recommendations
27
She anticipates that approximately 14,000 jobs will
be created throughout the state as a result of the
federal economic recovery funds.
Seventy “shovel-ready” projects totaling $466 mil-lion
have been identified across the state utilizing
the first half of available funding for highways and
bridges. Projects that will be funded from the
remaining funds for highways and bridges and
transit funds are currently being identified and
should be completed soon.
Projects selected for funding have been and will
continue to be strategically selected to represent
geographical diversity and broad scope, and will
benefit a wide range and size of partners in the
transportation industry.
Impact of Federal Economic Recovery Funds on
NC’s Transportation Program
The Economic Recovery and Reinvestment Act was
signed into law on February 17, 2009. The primary
focus of the plan is the preservation and creation
of jobs. The package approved by Congress pro-vides
$47.8 billion for Transportation.
North Carolina’s expected share of highway and
bridge funding is $735 million to be distributed
by the state equity formula, and $103 million in
transit federal formula grants. Fifty percent (50%)
of available funds are required to be obligated by
states within 120 days, and the remainder within
one year of enactment.
Governor Perdue is already beginning to put the
federal recovery funds to work in North Carolina
to help create jobs and stimulate local economies.
Figure 6
Funding Sources
North Carolina Transportation Program
2009-10
Highway Fund
46.9%
Highway Trust Fund
23.9%
Department Receipts
1.1%
Federal Funds
28.2%
28
Figure 7
Funding Sources
North Carolina Transportation Program
2010-11
Highway Fund
46.0%
Highway Trust Fund
24.5%
Department Receipts
1.2%
Federal Funds
28.3%
Figure 8
Appropriations
North Carolina Transportation Program
2009-10
Construction
43%
State Aid
8%
Ferry Operations
1%
Other Programs
0%
Reserves
0%
Debt Service
4%
Agency
Administration
4%
Division of
Motor Vehicles
4%
NC Turnpike
Authority
2%
Transfers to Other
State Agencies
11%
Maintenance
23%
29
Figure 9
Appropriations
North Carolina Transportation Program
2010-11
Transfers to Other
State Agencies
10%
NC Turnpike
Authority
3%
Agency
Administration
4%
Division of
Motor Vehicles
4%
Debt Service
3%
Reserves
0%
Other Programs
0%
Ferry Operations
1%
State Aid
8%
Maintenance
22%
Construction
45%
30
Education
•• Provides $10 million in appropriations for
the UNC-CH Biomedical Research Imaging
Center for 2009-10. A total of $20.5 million
has been previously funded. An additional
$229.5 million will be needed to fund later
phases of the project which are scheduled
for completion in 2013. The governor intends
to finance the completion of the project us-ing
bonded indebtedness beginning in FY
2010-11. Repayment of debt will be shared
with 15% from UNC-Chapel Hill, 15% from
UNC Hospitals, and 70% from the General
Fund.
Natural and Economic Resources
•• Appropriates $17.6 million for the state’s
share of civil works projects for navigation,
flood control, drainage, and beach protec-tion.
The costs of these projects are shared
by federal and/or local governments using
a statutory formula. Total project costs are
$100.7 million, including $83.1 million from
federal/local matching funds.
Governor Perdue recommends a minimal capital
financing package, limited by the current, severe
economic recession. The proposed capital
budget includes $27.6 million from General
Fund appropriations with $83.1 million from
federal/local matching funds. No appropriation
is recommended for the Repair and Renovation
Reserve. Debt financing is not recommended
for 2009-10. The 2009 Debt Affordability Study
indicates a very limited capacity for the state to
issue new debt and stay within accepted debt
service limitations. In addition, the level of future
revenues is uncertain.
Background – The 2008-09 CI Budget
The Appropriations Act of 2008 included
$69,839,238 for the Repair and Renovation
Reserve, $129,082,062 for appropriated (pay-as-you-
go) projects, $750,463,944 of Special Indebt-edness
projects, and $107,000,000 of General
Obligation Bonds (the Two-Thirds Bond Act of
2008) for a total of $1,056,385,244. In response
to lower revenues, $175,850,370 was withheld
from appropriated projects and from the Repair
and Renovation Reserve.
Capital Improvements
Major Recommendations
Figure 10
Authorized/Proposed Capital Funds
$27.6
$1,044.9 $1,056.4
$1,147.7
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2006-07 2007-08 2008-09 2009-10 Proposed
Millions
Withheld or Delayed
GO Bonds
Special Financing
R&R Reserve Account
Appropriations
31
savings of $17 million per year of the bien-nium
and will not affect any employee who is
covered by the State Health Plan.
•• Freeze teacher and state employee longevity
payments for two years, saving about $170
million per year of the biennium. Teachers’
and state employees’ final retirement calcula-tions
will be held harmless from this longev-ity
reduction. State employees who are not
on the Teacher Salary Schedule will receive
bonus leave for each year of the biennium in
lieu of longevity payments. The amount of
bonus leave is commensurate to the employ-ee’s
years of service in state government.
Teachers and State Employees
•• Allocate approximately $125 million in the
first year and $228 million in the second year
of the biennium to the State Health Plan
to support an approximate 7.4% per year
increase in employer-paid premiums.
•• Allocate $21 million in each year of the bien-nium
to the Retirement System to maintain
the system’s actuarially sound status.
•• Provide employer-paid funds for health care
premiums at actual costs, rather than on a
per-employee basis because many state em-ployees
choose not to participate in the State
Health Plan. This reduction will generate a
Teachers and State Employees
Major Recommendations
33
Economy and Revenue
Economy
Outlook for the Nation and State
Revenue
General Fund Revenue Forecast
Highway Fund Revenue
Highway Trust Fund Revenue
35
values, consumers have cut back spending consid-erably.
Real consumer spending fell 3.5% in the 4th
quarter of 2008, following a decline of 3.8% in the
3rd quarter. Going forward, falling energy prices
and the fiscal stimulus are expected to boost dis-posable
income.
North Carolina’s economy reflects
national conditions
After 3 consecutive years of greater than 2.0%
job growth, North Carolina’s labor market slowed
significantly over the past year. In 2008, total
nonfarm payrolls were down 120,200 jobs or 2.9%
compared to a year ago. The sharp slowdown in
recent months has particularly impacted North
Carolina. The unemployment rate reflects these
job losses as it soared to 9.7% in January 2009.
Education and Health employment prop up
service sector. The education and health services
category was the only service sector to register
positive growth in 2008. Specifically, education
and health gained 18,100 jobs over the past
year, while the other service sectors experienced
broad declines. Professional and business
services suffered significant losses (39,800) after
consecutive years of strong growth. Leisure and
hospitality services also posted a slight decline
(2,100).
Manufacturing losses increase. After a brief
improvement in 2005 and 2006, the rate of job
losses in the manufacturing sector has accelerated
over the past 2 years. As of December 2008,
manufacturing employment was down 7.4%
compared to the previous year. Faced with
increasing competition from overseas, the textiles,
apparel, and furniture industries continue to suffer
the largest job losses.
Review of Current Fiscal Year
The recession deepens
The U.S. economic struggles continued in earnest
this year, as recessionary conditions worsened
in the second half of 2008. Job losses mounted
and the unemployment rate increased rapidly.
Cheaper energy prices and tax cuts did not
outweigh significant headwinds facing consumers
as spending declined. Continued deterioration
in the housing market also contributed to the
economic decline.
Real Gross Domestic Product (GDP) declining
sharply during 2008-09. The value of all goods
and services produced within the U.S., adjusted for
inflation, dropped 3.8% in the 4th quarter of 2008.
The economy is expected to contract further in the
1st quarter of 2009.
Job losses are accelerating. The cumulative job
loss since the employment peak in December 2007
has grown to 3.57 million. Employment losses
totaled 1.24 million in the 4th quarter of 2008
and are expected to get worse in the 1st quarter
of 2009. The job losses have been apparent in
almost all sectors, with only health and education
services and government showing any gains. The
unemployment rate started 2008 at 4.9%, but has
climbed to 7.6%.
Housing remains a drag on growth. The housing
downturn continues as total housing starts and
total housing permits have reached all-time lows.
While mortgage rates have fallen to 5.0% levels,
the benefits appear related to refinancing as
opposed to home purchases.
Consumers retrenched. With job losses, tighter
credit conditions, and declining home and stock
Economy
Outlook for the Nation and State
36
•• Housing starts are expected to hit bottom in
the 1st half of 2009 and rebound in 2010 and
2011. Prices will continue to fall in 2009 and
2010 as inventory levels remain high.
•• Even with a boost from the fiscal stimulus, con-sumer
spending is expected to decline 1.0%
in 2009, the sharpest drop since 1942. Modest
spending growth is expected to return in 2010
and 2011.
•• Firms have few reasons to start new buildings
or renovate existing ones. Total nonresidential
construction is projected to fall 16.6% in 2009
and 15.8% in 2010. As the business outlook
improves, nonresidential investment returns to
positive growth in 2011.
North Carolina’s economy expected
to improve in 2010 and 2011
Similar to expectations for the national economy,
a stagnant North Carolina economy is expected
in 2009. Large job declines in the manufacturing
and construction sectors will be significant drags
on economic growth. The economy begins to
recover in 2010 as manufacturing losses stabilize,
construction rebounds, and the service sector
remains a solid source of growth. Highlights of
projections for North Carolina’s economy include:
•• Despite a significant deceleration in personal
income growth, the state is likely to outpace
the U.S. in 2009, 2010, and 2011 (see figure 11).
•• Employment is expected to fall 3.0% in 2009,
about the same as the projected U.S. decline.
Nonfarm employment is forecast to expand
0.5% and 1.9% in 2010 and 2011, respectively.
•• Reflecting the employment slowdown, the
unemployment rate is projected to peak just
below 10.0% in 2010 before falling to the 9.0%
level in 2011.
•• Employment gains will be led by the educa-tion
and health services sector, which is pro-jected
to average 2.5% growth over the next
several years.
Housing weakness impacts North Carolina.
Since North Carolina did not have the run-up in
housing prices that occurred in many other parts
of the country, it has avoided some of the hous-ing
market’s troubles and affordability problems.
However, the state has not been immune. Hous-ing
starts have dropped more than 35% over the
year, causing construction job growth to deceler-ate
significantly. Construction posted a significant
7.0% decline compared to the past year. Home
prices remain positive, but only marginally.
Outlook for the Remainder of
2009 and for 2010 and 2011
U.S. economy improves in 2010
and 2011
The U.S. economy continues to struggle for
the remainder of 2009 as job losses swell and
consumers pull back. The fiscal recovery package
and other policy measures will help stabilize the
economy in later 2009, with employers starting to
add jobs again in early 2010. A mild rebound is
expected in 2010 followed by improved growth in
2011. Highlights of the economic outlook include:
•• Real GDP is expected to decline sharply
through the first 2 quarters before stabiliz-ing
in the second half of 2009. In total, the
economy is projected to contract 2.7% in 2009.
Growth is expected to be 2.0% in 2010 fol-lowed
by 3.5% in 2011.
•• Nonfarm payrolls are expected to continue
declines in 2009 before rebounding modestly
in 2010 and 2011. The unemployment rate is
projected to peak near 9.4% in early 2010 and
fall to 8.7% in 2011.
•• Inflation is expected to fall 1.9% in 2009, the
first yearly decline since 1955. As consumer
demand slowly returns, prices are expected to
increase 1.7% in 2010 and 2.2% in 2011. Core
inflation, which excludes food and energy, is
expected to remain positive in 2009 and stay
under 2.0% through 2011.
37
•• North Carolina’s manufacturing employment
losses are expected to accelerate in 2009 be-fore
stabilizing in 2010 and 2011. Since the
beginning of the 2001 national recession, the
state has lost 232,200 (31.9%) manufacturing
jobs.
•• Housing starts are projected to fall 33.1%
in 2009 before bouncing back with solid
growth in 2010 and 2011.
•• After a significant decline in 2009, the
professional and business services sector is
expected to register solid job growth in 2010
and 2011.
•• Construction employment is likely to expe-rience
significant job losses over the next
several years as construction activity has
fallen dramatically. Specifically, construction
employment is projected to decline 11.3% in
2009 and 7.0% in 2010 before finally realizing
small job gains in 2011.
Figure 11
NC Income Expected to Exceed US
Percentage Growth in Personal Income
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
NC US
38
For each of the major categories of general fund
revenue, the current performance and fiscal
year 2009-10 and 2010-11 baseline forecasts are
discussed below, along with any recommended
tax changes.
Individual income taxes
Net individual income tax receipts totaled $6,152.0
million through the first 7 months of fiscal year
2008-09, about $403.2 million below the official
estimate. For 2008-09, a 5.0% decline is expected
over the previous fiscal year.
Significant job losses and income declines
have fueled this decreases. In particular, the
rate of manufacturing losses has accelerated
again. In addition, the professional and business
services and construction sectors have retracted
significantly. Wages are likely to register minimal
to no growth while nonwage income has
plummeted.
As the economy begins to recover in late 2009
and early 2010, North Carolina’s employment
and wages are expected to slightly improve. This
recovery is expected to gain momentum in 2010-
11. Reflecting this outlook, baseline individual
income tax collections are expected to grow only
0.3% in 2009-10 and 5.2% in 2010-11.
Sales and use taxes
While lower energy prices and tax cuts provided
some support to consumer spending, the impact
has been outweighed by job losses, a tight
credit market, and reduced home and stock
values. Reflecting this decline, sales and use
tax collections are significantly below forecast
through the first 7 months of 2008-09. For 2008-
09, sales and use collections of $4,793.1 million
are expected, a 3.8% decline compared to the
About half of North Carolina’s total revenue
originates from tax collections and other sources
comprising the General Fund. The other half
consists of funds from the federal government,
highway funds, the Education Lottery, and other
receipts and fees (e.g., tuition).
General Fund revenues are primarily derived from
three sources: individual income tax, corporate
income tax, and the sales and use tax. Other
important sources include franchise, insurance,
alcohol, and other miscellaneous taxes. In
addition, nontax revenue, such as earnings from
investment of state funds, supports the General
Fund (see Table 9).
General Fund Revenue Reflects
Sluggish Economy
Similar to many other states, the financial
sector problems and rapid decline in economic
conditions have led to historic revenue declines
in North Carolina. Through the first 7 months of
2008-09, total General Fund revenue collections
(including nontax receipts and transfers) are
$991.3 million or 8.6% below expectations. By
the end of 2008-09, it is currently projected
that General Fund revenue collections will total
$18,648.4 million, $2,201.3 million below the
budgeted forecast.
Reflecting a sluggish economy, baseline General
Fund revenue is expected to grow only by 0.1%
in 2009-10. As the economy improves in 2010-
11, baseline General Fund revenue is expected
to rebound to 5.4% growth in 2010-11. Table
10 details these forecasts, adjusted for the
recommended tax changes discussed below. It
also shows the projected and budgeted general
fund revenue for fiscal year 2008-09. Figure 13
shows the distribution of General Fund revenue
estimates for 2009-10.
Revenue
General Fund Forecast
39
2008-09 2008-09 2009-10 2010-11
Budgeted Revised Estimated Estimated
Tax Revenue
Individual Income $ 11,386.2 $ 10,356.1 $ 10,399.7 $ 10,959.3
Sales and Use 5,374.3 4,793.1 5,038.4 5,400.3
Corporate Income 1,191.5 767.6 785.0 837.2
Franchise 587.0 607.2 618.7 646.6
Insurance 522.2 508.4 520.6 535.6
Tobacco Products 236.2 232.6 559.0 668.9
Beverage 233.8 230.4 392.2 449.0
Inheritance 161.7 119.5 129.3 134.5
Licenses 56.0 42.4 61.7 63.3
Mill Machinery 38.3 32.9 33.9 34.9
Piped Natural Gas 35.7 37.2 38.1 39.1
Gift 16.5 16.5 0.0 0.0
Miscellaneous 0.0 0.0 0.0 0.0
Total Tax Revenue $ 19,839.4 $ 17,743.9 $ 18,576.6 $ 19,768.7
Nontax Revenue
Investment Income 248.1 158.0 136.4 153.8
Judicial Fees 204.8 193.5 208.6 219.4
Disproportionate Share Receipts 100.0 100.0 125.0 100.0
Insurance Department 228.8 217.4 195.7 201.5
Miscellaneous 63.5 70.5 73.6 78.0
Total Nontax Revenue $ 845.2 $ 739.4 $ 739.2 $ 752.7
Transfers
Highway Fund 147.5 147.5 108.5 73.5
Highway Trust Fund 17.6 17.6 17.6 17.6
Total Transfers $ 165.1 $ 165.1 $ 126.1 $ 91.1
Total General Fund Revenue $ 20,849.7 $ 18,648.4 $ 19,441.9 $ 20,612.5
Totals may differ from the sum of their parts due to rounding.
* Net of tax cut proposals
Table 9
General Fund Revenue
Detailed Estimates for 2008-09 and 2009-11 ($mil)
40
nomic conditions improve. Reflecting this forecast
and the historical volatility of this revenue source,
baseline corporate income tax receipts are ex-pected
to decline slightly in 2009-10 followed by
moderate growth in 2010-11.
Major tax changes
•• Tobacco Tax Increase – To help North Carolina
recover the added health costs incurred be-cause
of smoking, the Governor recommends
increasing the cigarette tax from 35 cents per
pack to $1.35 per pack. The Governor also
recommends raising the tax on other tobacco
products from 10% to 28% of the wholesale
price. These increases would take effect
on September 1, 2009 and are expected to
generate $350.4 million in 2009-10 and $467.1
million in 2010-11. At $1.35 per pack, North
Carolina’s cigarette tax rate would still only
rank 20th (up from 45th currently) among states.
•• Alcohol Tax Increase – The Governor recom-mends
adding a 5.0% tax surcharge to all
alcohol purchases. This additional tax would
take effect on September 1, 2009 and would
previous fiscal year and $581.2 million below
budgeted revenue.
The stimulus and falling prices are expected
to provide a boost for consumers in mid-2009,
yet spending will still likely decline for the year.
Spending is expected to slowly pick up again
through 2010 and 2011. Translated into revenue
collections, baseline sales collections are forecast
to register little to no growth in 2009-10 before
rebounding in 2010-11.
Corporate income taxes
Following a significant decline in 2007-08,
corporate collections have slowed further in
2008-09 as the recession has severely impacted
profitability. Through the first 7 months of 2008-
09, corporate collections were substantially below
the official forecast. This trend is expected to
continue over the remainder of 2008-09, resulting
in collection totals 35.6% below budgeted
revenue.
Corporate profitability is projected to remain flat in
2010 before improving in 2011 as general eco-
Figure 12
General Fund Revenue
Estimates for 2009-10
Individual Income
Tax 53%
Sales and Use
26%
Franchise 3%
Other Tax Insurance 3%
Revenue 6%
Transfers 1%
Nontax Revenue
4%
Corporate Income
Tax 4%
41
Percent Percent
Change Change
2008-09 2008-09 2009-10 2008-09 to 2010-11 2009-10 to
Budgeted Revised Difference Estimated 2009-10 Estimated 2010-11
Individual Income Tax 11,386.2 10,356.1 (1,030.1) 10,399.7 0.4% 10,959.3 5.4%
Sales and Use 5,374.3 4,793.1 (581.2) 5,038.4 5.1% 5,400.3 7.2%
Corporate Income Tax 1,191.5 767.6 (423.9) 785.0 2.3% 837.2 6.6%
Franchise 587.0 607.2 20.2 618.7 1.9% 646.6 4.5%
Insurance 522.2 508.4 (13.8) 520.6 2.4% 535.6 2.9%
Other Tax Revenue 778.2 711.5 (66.7) 1,214.2 70.7% 1,389.7 14.5%
Nontax Revenue 845.2 739.4 (105.8) 739.2 0.0% 752.7 1.8%
Transfers 165.1 165.1 0.0 126.1 -23.6% 91.1 -27.8%
Total Revenues 20,849.7 18,648.4 (2,201.3) 19,441.9 4.3% 20,612.5 6.0%
Unreserved Credit Balance
Total Availability
Table 10
General Fund Revenue
Revised Estimates for 2008-09 and 2009-11, ($mil)
Totals may differ from the sum of their parts due to rounding.
help North Carolina cover the added health
costs incurred from alcohol consumption. This
increase is expected to generate $157.5 and
$210.0 million in 2009-10 and 2010-11, respec-tively.
•• IRC Update - The Governor recommends an
update to the Internal Revenue Code reference
used in defining and determining certain State
tax provisions. Specifically, the Governor rec-ommends
conformity to the endangered spe-cies
deduction and extension of the conserva-tion
easements deduction in the Heartland,
Habitat, Harvest, and Horticulture Act of 2008.
From the Heroes Earnings and Relief Tax Act of
2008, the Governor recommends making state
or local bonus payments to combat veterans
tax-free and allowing military death benefit
contributions to Roth IRAs and Coverdell ESAs.
The Governor also recommends extending
deductions for tuition and certain teacher ex-penses
contained in the Emergency Economic
Stabilization Act of 2008. These changes are
expected to save taxpayers $10.4 and $20.1
million in 2009-10 and 2010-11, respectively.
•• Small Business Relief – As part of the Governor’s
effort to create jobs, stabilize the economy,
and encourage economic investment, the
Governor recommends targeted tax relief for
small business. Specifically, the Governor rec-ommends
that companies with profits below
$100,000 be able to exempt the first $25,000
from net income. Companies with profits be-tween
$100,000 and $200,000 would be able
to exempt the first $15,000. This exemption
would take effect for tax years beginning on or
after January 1, 2010 and is expected to save
small businesses $12.0 million in 2009-10 and
$24.0 million in 2010-11.
•• Founder’s Credit – The Governor recommends
excluding initial stock investments (“founder’s
stock”) in certain NC start-up companies from
capital gains. This credit would take effect
for tax years beginning on or after January 1,
42
2010. There is no fiscal impact estimated for
2009-10 or 2010-11.
•• Expand Earned Income Tax Credit (EITC) – Cur-rently,
North Carolina’s earned income tax
credit is 5.0% of the federal credit. To provide
further relief for low and moderate-income
working families, the Governor recommends
increasing the North Carolina rate to 6.5%
effective for tax years beginning on or after
January 1, 2010. This credit is expected to save
taxpayers $21.0 million in 2010-11.
•• Sales Tax Holiday for WaterSense Products – Wa-terSense,
a partnership program sponsored by
EPA, enhances the market for water-efficient
products and programs. The WaterSense label
indicates that products meet water efficiency
and performance criteria. The Governor rec-ommends
expanding the current Energy Star
Appliance holiday to also include products
with the WaterSense label. There is no esti-mated
fiscal impact in 2009-10 and 2010-11.
•• Caregiver Credit – To help relieve the economic
burden of caring for older family members, the
Governor recommends providing a tax credit
for certain caregiving expenses for qualified
family members. This credit is estimated to
save taxpayers $0.8 million in 2010-11.
•• Fee Increases – The Governor recommends in-creasing
the annual license fee on profession-als
from $50.00 to $200.00. This change and
various smaller fee increases are expected to
generate an additional $27.4 million in 2009-
10 and $30.6 million in 2010-11.
43
budgeted revenues. Revised Highway Fund tax
revenues, for fiscal year 2008-09, are expected
to fall short of budgeted revenues by $114.9
million or 6.2%. Total Highway Fund revenues are
estimated to decline in fiscal years 2009-10 and
2010-11 by 1.4% and 1.5% respectively.
Motor Fuels Excise Tax
The motor fuels excise tax is set twice in a fiscal
year, once in January and again in July. The new
rate is based on a six-month weighted average of
the wholesale price of gasoline and diesel motor
fuels. By actions of the 2007 General Assembly,
to provide relief to North Carolina motorists, the
variable component of the excise tax on motor
fuels was set at a rate not to exceed 12.4 cents per
gallon for the period of July 1, 2007 through June
30, 2009. This capped the tax rate on motor fuels
The Highway Fund receives support from three
revenue sources. The first and primary source
is the excise tax on motor fuels, of which the
Highway Fund receives 75.0%. The second source
of revenue is licenses and fees collected by the
Division of Motor Vehicles. The third source
is interest earned on investments of Highway
Fund cash balances held by the State Treasurer.
Figure 13 shows the percentages of the various
components of the Highway Fund revenue
collections projected for fiscal year 2009-10.
Highway Fund Forecast
The continued fall in consumer and business
confidence as a result of the intensification of
the economic recession has led to a decline in
Highway Fund revenues for fiscal year 2008-09. As
of January 2009, fiscal year-to-date actual Highway
Fund revenues were $42.8 million or 4.1% below
Revenue
Highway Fund
Figure 13
Highway Fund Revenue Collections
2009-10
Driver Licenses
7.5%
International
Registration Plan
(IRP) 3.6%
Staggered
Registration 11.3%
Gasoline
Inspection and
Highw ay Usage
Registration 0.8%
Motor Fuel 65.0%
Truck Licenses
7.7%
Investment Income
0.9%
Other Licenses
and Fees 3.2%
44
to rebound in fiscal year 2009-10 and in fiscal year
2010-11 by 2.3% and 1.9%, respectively.
Investment Income
Through the first seven months of fiscal year 2008-
09, current interest earnings on investments held
with the State Treasurer have exceeded budgeted
revenues by $6.8 million. Total investment income
is expected to meet budgeted revenues of $16.0
million for fiscal year 2008-09. The interest rate
used to estimate the certified budget revenue
for fiscal year 2008-09 was based on an average
annual rate of 4.0%. As of January 2009, the
effective annual interest rate on investments held
with the State Treasurer was 3.6%, down from 5.0%
in January 2008.
The average annual interest rates on investments
held with the State Treasurer are expected to fall
over the biennium, translating into investment
income of $6.0 million in each year.
Revenue Availability
The revenue available for distribution under the
Highway Fund is estimated to be $1,683.5 million
in 2009-10. In 2010-11 the estimated revenue
available for distribution is $1,658.5 million (see
Table 11).
at 29.9 cents a gallon for the period. When the
freeze expires on June 30, 2009, the motor fuels
tax rate is estimated to average 29.16 cents per
gallon in fiscal year 2009-10 and 28.06 cents per
gallon in fiscal year 2009-10.
Nationally, traffic volume as a measure of
vehicle miles driven trended down by 5.3% for
November 2008 as compared to November 2007.
Over the same period, traffic volume in North
Carolina declined 6.0%. The decline in motor fuel
consumption is expected to continue through the
biennium.
As of January 2009, fiscal year-to-date excise tax
collections on motor fuels have fallen $39.8 million
or 5.7% below the fiscal year 2008-09 budgeted
revenue. Total motor fuel tax collections that go to
the Highway Fund are estimated to decline 2.5%
in fiscal year 2009-10 and fall an additional 3.5% in
fiscal year 2010-11.
Licenses and Fees
Revenue collected from staggered registrations,
truck registrations, driver licenses, and certain
miscellaneous fees are expected to decline $17.9
million or 3.0% below budgeted revenues in fiscal
year 2008-09. License and fee revenue is expected
45
2008-09 2008-09 2009-10 % Change 2010-11 % Change
Budgeted Revised Inc/(dec) % Change Estimated* Revised Estimated* 2009-10
$1,184.5 $1,089.1 (95.4) -8.1% $1,061.6 -2.5% $1,024.9 -3.5%
14.9 13.3 (1.6) -10.8% 13.3 0.0% 13.4 0.4%
0.2 0.2 0.0 0.0% 0.2 0.0% 0.2 -23.8%
$1,199.7 $1,102.7 (97.0) -8.1% $1,075.1 -2.5% $1,038.5 -3.4%
$205.9 $197.4 (8.5) -4.1% $201.0 1.8% $204.3 1.7%
65.6 63.0 (2.6) -4.0% 64.5 2.5% 66.0 2.2%
137.4 131.9 (5.5) -4.0% 135.2 2.5% 136.9 1.3%
139.7 134.1 (5.6) -4.0% 137.1 2.2% 140.1 2.2%
58.2 62.6 4.3 7.4% 64.6 3.2% 66.7 3.2%
$606.9 $589.0 (17.9) -3.0% $602.4 2.3% $614.0 1.9%
$16.0 $16.0 0.0 0.0% $6.0 -62.5% $6.0 0.0%
Total Tax Revenue $1,822.6 $1,707.6 (114.9) -6.3% $1,683.5 -1.4% $1,658.5 -1.5%
35.0 35.0 - 0.0 0.0
Total Highway Fund Availability $1,857.6 $1,742.6 (114.9) -6.2% $1,683.5 -3.4% $1,658.5 -1.5%
* Revised Estimate based on actual collections through January 2009.
Truck Licenses
Other Licenses and Fees
Licenses and Fees
Staggered Registration
Beginning Credit Balance
Total Motor Fuel Taxes
Motor Fuels Tax
Motor Fuels
Gasoline Inspection
Highway Use Reg.
Total Licenses and Fees
International Registration Plan
Driver Licenses
Investment Income
Source
Table 11
Highway Fund Revenue
Detailed Estimates for 2009-10 and 2010-11
($ Millions)
46
Highway Trust Fund revenues for fiscal year 2008-
09. As of January 2009, fiscal year-to-date actual
Highway Trust Fund revenues were $94.3 million
or 14.9% below budgeted revenues. Revised
Highway Trust Fund tax revenues, for fiscal year
2008-09, are expected to fall short of budgeted
revenues by $190.6 million or 17.8%. Total
Highway Trust Fund revenues are estimated to
decline 2.8% in fiscal year 2009-10 and increase
slightly in fiscal year 2010-2011.
Highway Use Tax
The decline in motor vehicle sales are a result
of a faltering economy beset with tight credit,
increasing unemployment, and falling consumer
demand for automobiles. As of January 2009,
fiscal year-to-date highway use tax collections
have fallen $72.9 million or 21.7% below fiscal
The Highway Trust Fund, established in 1989,
receives support from four sources. The first
and primary source is the highway use tax,
or sales tax, on most noncommercial vehicle
sales. The second source is twenty-five percent
(25.0%) of the excise tax on motor fuels. The
third source is fees on certificates of title and
other miscellaneous titles. The final source is
the interest earned from investments of the
Highway Trust Fund cash balances held by the
State Treasurer. Figure 14 shows the percentages
of the various components of the Highway Trust
Fund revenue collections projected for fiscal year
2009-10.
Highway Trust Fund Forecast
The continued fall in consumer and business
confidence as a result of the intensification of
the economic recession has lead to a decline in
Revenue
Highway Trust Fund
Figure 14
Highway Trust Fund Revenue Collections
2009-10
Motor Fuels Tax
36.8%
Highw ay Use 53.1%
Certificate of Title
Miscellaneous Title Fees 8.3%
Fees 1.6%
Interest on
Investments 0.2%
47
declined 19.7%, slower than highway use tax
collections. Over the same period, miscellaneous
title fees declined 21.3%. Total combined fee
collections for fiscal year 2008-09 are estimated
to fall below certified budgeted revenues by
$16.8 million or 15.9%. Total combined title fee
collections are estimated to increase 2.2% in
fiscal year 2009-10 and 2.1% in fiscal year 2010-
11.
Investment Income
Highway Trust Fund cash balances held with the
State Treasurer are used to pay more frequent
expenses associated with contractual activity.
The monthly interest earnings are subject to
more variable principal balances. Through
the first seven months of fiscal year 2008-09,
interest earnings on investments held with the
state treasurer are $1.0 million below certified
budgeted revenues. As of January 2009, the
effective annual interest rate on investments
held with the State Treasurer was 3.6%, down
from 5.0% in January 2008.
The average annual interest rates on investments
held with the State Treasurer are expected to fall
over the biennium, translating into investment
income of $1.4 million in each year.
Transfers to General Fund
Prior to the creation of the Highway Trust Fund
in 1989, the sales or use tax from the retail sale
and the long-term lease of motor vehicles was
collected under General Fund revenues. In
order to hold the General Fund harmless, an
annual distribution is made from the Highway
Trust Fund revenue collections to the General
Fund. By actions of the 2008 General Assembly,
the annual distribution will be reduced each
year until the transfer to the General Fund is
phased out. For fiscal years 2009-10 and 2010-
11, the transfers are $108.6 and $72.9 million,
respectively.
Revenue Availability
The revenue available for distribution under the
Highway Trust Fund is estimated to be $748.9
million in 2009-10 and $811.3 million in 2010-11
(see Table 12).
year 2008-09 budgeted revenue. Total highway
use tax collections for fiscal year 2008-09 are
estimated to be below budgeted revenues by
$142.0 million or 24.9%. With no improvement
expected in vehicle sales in fiscal year 2009-10,
total highway use tax collections are estimated
to fall an additional 4.0%. A slight increase is
expected in fiscal year 2010-11.
Motor Fuels Excise Tax
The motor fuels excise tax is set twice in a fiscal
year, once in January and again in July. The new
rate is based on a six-month weighted average of
the wholesale price of gasoline and diesel motor
fuels. To provide relief to North Carolina motorists,
by actions of the 2007 General Assembly, the
variable component of the excise tax on motor
fuel was set at a rate not to exceed 12.4 cents per
gallon for the period of July 1, 2007 through June
30, 2009. This capped the tax rate on motor fuels
at 29.9 cents a gallon for the period. When the
freeze expires on June 30, 2009, the motor fuel tax
rate is estimated to be 29.16 cents per gallon in
fiscal year 2009-10 and 28.06 cents per gallon in
fiscal year 2010-11.
Nationally, traffic volume as a measure of
vehicle miles driven trended down by 5.3% for
November 2008 as compared to November 2007.
Over the same period, traffic volume in North
Carolina declined 6.0%. The decline in motor fuel
consumption is expected to continue through the
biennium.
As of January 2009, fiscal year-to-date excise tax
collections on motor fuels credited to the Highway
Trust Fund have fallen $8.4 million or 3.6% below
budgeted revenues for fiscal year 2008-09. Total
motor fuel tax collections that go to the Highway
Trust Fund are estimated to decline 2.5% in fiscal
year 2009-10 and fall an additional 3.5% in fiscal
year 2010-11.
Miscellaneous Title Fees
Certificates of title and other miscellaneous title
fee collections generally trend up or down with
highway use tax collections. For the first seven
months of fiscal year 2008-09, certificates of title
48
2008-09 2008-09 2009-10 % Change 2010-11 Percent
Budgeted Revised Inc/(dec) % Change Estimated* Revised Estimated* Change
$394.9 $363.0 (31.8) -8.1% $353.9 -2.5% $341.6 -3.5%
570.0 428.0 (142.0) -24.9% 410.9 -4.0% 447.9 9.0%
89.2 74.4 (14.8) -16.6% 76.2 2.5% 77.9 2.2%
17.1 15.0 (2.0) -12.0% 15.1 0.7% 15.4 1.7%
$1,071.0 $880.4 (190.6) -17.8% $856.1 -2.8% $882.8 3.1%
$2.1 $2.1 0.0 0.0% $1.4 -34.0% $1.4 0.0%
$ 1,073.2 $ 882.5 (190.6) -17.8% $857.5 -2.8% $884.2 3.1%
Transfer to General Fund** 147.5 147.5 (108.56) (72.85)
Revenue Available $925.6 $735.0 (190.6) -20.6% $748.9 1.9% $811.3 8.3%
* Revised Estimate based on actual collections through January 2009.
Table 12
Detailed Estimates for 2009-10 and 2010-11
($ Millions)
Highway Trust Fund Revenue
** Statutory distribution, G.S.105-187.9
Total Highway Trust Fund Availability
Interest on Investments
Source
Fuel Taxes and Fees
Highway Use
Certificate of Title Fees
Miscellaneous Title Fees
Subtotal
Motor Fuel Tax
49
Capital
Improvements
General Fund
Non-General Fund
General Fund
Capital Improvements
51
North Carolina State Budget
Summary of Recommendations, 2009-11
Governor's Recommended Adjustments to Base Budget
Capital Improvements - General Fund (19600)
Recommended General Fund Budget and Positions
2009-10 2010-11
Base Budget
Requirements - -
Receipts - -
Appropriation - -
Recommended Adjustments
Requirements $110,745,588 -
Receipts $83,145,588 -
Appropriation $27,600,000 -
Total
Requirements $110,745,588 -
Receipts $83,145,588 -
Recommended Appropriation $27,600,000 -
Positions
Base Budget Positions - -
Reductions - -
Expansion - -
Recommended Positions - -
General Fund
Capital Improvements
52
North Carolina State Budget
Summary of Recommendations, 2009-11
Appropriation Items -- Legislative Revisions and Other Adjustments
Expansion
2009-10 2010-11
Natural and Economic Resources
1. DENR - Water Resources Projects
The Governor recommends funds for the state's share of civil works
projects for navigation, flood control, drainage, and beach protection.
The costs of these projects are shared by federal and/or local
governments using a statutory formula.
Requirements - Nonrecurring $100,745,588
Receipts - Nonrecurring $83,145,588
Appropriation - Nonrecurring $17,600,000 -
UNC Board of Governors
1. UNC-CH Biomedical Research Imaging Center (BRIC)
The Governor recommends an appropriation of $10,000,000 for the
UNC-CH Biomedical Research Imaging Center. This project includes a
343,000 square-foot facility that will support image-based biomedical
research across the UNC system utilizing current programs in medical
imaging at Chapel Hill and NCSU through the new joint Department of
Biomedical Engineering. This facility will also be used for cancer drug
research in collaboration with the Biomanufacturing Research Institute
and Technology Enterprise program (BRITE) at NCCU. The estimated
total project cost is $280 million. The General Assembly appropriated
$8 million in FY 2007-08 to begin planning this project. In FY 2008-09,
the General Assembly appropriated $35 million to complete planning,
begin site development, pre-purchase materials, and increase the
scope of the project to include wet labs and drug research space.
Due to the budget shortfall and based on estimated cash flow
projections, the FY 2008-09 appropriation was reduced to $12.5 million.
As a result, a total of $20.5 million has been made available for this
project. The university expects to receive $20 million in receipts and
gifts towards the project. This appropriation will provide funding for
projected cash flow requirements through FY 2009-10. An additional
$229.5 million will be needed to fund later phases of the project which
is scheduled for completion in 2013. The governor intends to finance
the completion of the project using bonded indebtedness beginning in
FY 2010-11. Repayment of debt will be shared, with 15% from UNC-Chapel
Hill, 15% from UNC Hospitals, and 70% from the General Fund.
General Fund
Capital Improvements
53
North Carolina State Budget
Summary of Recommendations, 2009-11
It is estimated that 7,898 jobs will be created or preserved in the State
during the construction of this project. The impact on health and
economic well-being is even greater. The annual cost of cancer in the
state is estimated to be about $5.57 billion; $1.89 billion for direct
medical care and $3.68 billion in lost productivity due to illness and
premature death.
The Biomedical Research Imaging Center is already underway. The early
site package, the first phase of the project, is under contract and set to
begin construction in April 2009. The concrete foundation and frame
(phase II) will begin in the fall of 2009.
Appropriation - Nonrecurring $10,000,000
Total Recommended Expansion
2009-10 2010-11
Recurring
Requirements - -
Receipts -
-
Appropriation - -
Positions - -
Nonrecurring
Requirements $110,745,588 -
Receipts 83,145,588
-
Appropriation $27,600,000 -
Positions - -
Non-General Fund
Capital Improvements
54
North Carolina State Budget
Summary of Recommendations, 2009-11
Total Recommended Adjustments for
Capital Improvements - General Fund (19600)
2009-11
2009-10 2010-11
Recurring
Requirements - -
Receipts - -
Appropriation - -
Positions - -
Nonrecurring
Requirements $110,745,588 -
Receipts 83,145,588 -
Appropriation $27,600,000 -
Positions - -
Total Appropriation Adjustments $27,600,000 -
Total Position Adjustments - -
Non-General Fund
Capital Improvements
55
North Carolina State Budget
Summary of Recommendations, 2009-11
Governor's Recommended Adjustments to Base Budget
Capital Improvements - Non-General Fund (19600)
Recommended Non-General Fund Budget and Positions
2009-10 2010-11
Base Budget
Requirements - -
Receipts - -
Appropriation - -
Recommended Adjustments
Requirements - -
Receipts - -
Appropriation - -
Total
Requirements - -
Receipts - -
Recommended Appropriation - -
Positions
Base Budget Positions - -
Reductions - -
Expansion - -
Recommended Positions - -
57
Reserves, Debt Service,
and Other Adjustments
General Fund
Reserves, Debt Service, and Other Adjustments
59
North Carolina State Budget
Summary of Recommendations, 2009-11
Governor's Recommended Adjustments to Base Budget
Reserves, Debt Service, and Other Adjustments - General Fund (190xx)
Recommended General Fund Budget and Positions
2009-10 2010-11
Base Budget
Requirements $986,063,200 $1,143,953,150
Receipts $51,504,322 $45,685,244
Appropriation $934,558,878 $1,098,267,906
Recommended Adjustments
Requirements ($207,222,318) ($222,737,128)
Receipts - -
Appropriation ($207,222,318) ($222,737,128)
Total
Requirements $778,840,882 $921,216,022
Receipts $51,504,322 $45,685,244
Recommended Appropriation $727,336,560 $875,530,778
Positions
Base Budget Positions - -
Technical Adjustments - -
Reductions (75.000) (100.000)
Expansion 15.000 15.000
Recommended Positions (60.000) (85.000)
Reserves, Debt Service, and Other Adjustments
60
North Carolina State Budget
Summary of Recommendations, 2009-11
Appropriation Items -- Legislative Revisions and Other Adjustments
Reductions
2009-10 2010-11
Statewide Reserves
1. Salary Adjustment Fund
It is recommended that monies in the Salary Adjustment Fund be
eliminated for the FY 2009-11 biennium.
Appropriation ($4,500,000) ($4,500,000)
2. Budget Health Care Premiums at Actual Costs
It is recommended that employer-paid funds for health care premiums be
budgeted at actual costs, since many state employees choose not to
participate in the State Health Plan. This reduction will not affect any
employee who is covered by the State Health Plan.
Appropriation ($25,000,000) ($25,000,000)
3. Freeze Longevity Payments for Two Years/Hold Retirement Calculation Harmless
It is recommended that teacher and state employee longevity payments
be frozen for two years. Teachers' and state employees' final retirement
calculations shall be held harmless from this longevity reduction.
Appropriation - Nonrecurring ($173,000,000) ($177,800,000)
4. Administrative Support Reduction Reserve
It is recommended that administrative support positions be reduced
statewide based on a 10:1 ratio. This ratio of employees to support staff is
standard in the private sector. Agencies shall make every attempt to
generate these savings through attrition; if filled positions need to be
eliminated, each agency, with assistance from the Office of State
Personnel, shall work to find employees an existing position in state
government.
Appropriation ($3,000,000) ($4,000,000)
Positions (75.000) (100.000)
5. Budget E-Procurement Receipts
Beginning in the second half of the biennium, the State will no longer
require all the revenue generated from the E-Procurement transaction fee
to run the E-Procurement system. These transaction fees will provide
funding for the IT Fund, thereby allowing for a reduction in general fund
appropriations. It assumes the current transaction fee of 1.75% will
remain.
Appropriation ($10,000,000)
Reserves, Debt Service, and Other Adjustments
61
North Carolina State Budget
Summary of Recommendations, 2009-11
6. Debt Service Requirements
It is recommended that debt service appropriations be reduced based
on lower than originally anticipated interest rates.
Appropriation ($4,000,000) ($4,000,000)
Appropriation - Nonrecurring ($3,500,000)
Total Recommended Reductions
2009-10 2010-11
Recurring
Requirements ($36,500,000) ($47,500,000)
Receipts -
-
Appropriation ($36,500,000) ($47,500,000)
Positions (75.000) (100.000)
Nonrecurring
Requirements ($176,500,000) ($177,800,000)
Receipts -
-
Appropriation ($176,500,000) ($177,800,000)
Positions - -
Expansion
2009-10 2010-11
Employee Benefits
1. Bonus Leave for State Employees
It is recommended that all state employees, except those paid on the
Teacher Salary Schedule, shall receive bonus leave for each year of the
biennium in lieu of longevity payments. The amount of bonus leave
received is commensurate to the employee's years of service in state
government. Employees with less than 10 years would receive no bonus
leave; employees with 10-15 years would receive 32 hours; employees
with 15-20 years would receive 48 hours; employees with 20-25 years
would receive 68 hours; and employees with 25+ years would receive 94
hours.
Appropriation - -
Reserves, Debt Service, and Other Adjustments
62
North Carolina State Budget
Summary of Recommendations, 2009-11
Other Reserves
1. 2010 Census Local Promotion
It is recommended that funds be appropriated to support the ''NC Can
Count on Me'' 2010 Census promotional campaign. 2010 Census data
will be used to apportion seats in the United States Congress and the
North Carolina General Assembly, distribute state and federal resources,
and support needs assessment and planning for the future of our
communities. The campaign will support the creation of local Complete
Count Committees across the state by providing information and
material to inform North Carolinians of the importance of the United
States Census and encourage their participation. The campaign will also
include public service announcements for broadcast across the state's
television and radio stations. Funds will be managed by the State Data
Center in the Office of State Budget and Management.
Appropriation - Nonrecurring $750,000 -
Transparency and Accountability
1. State Web Portal and Accountability Web sites
It is recommended that funds be appropriated to support ongoing
operations of the State web portal and accountability websites that
provide citizens easier access to public information, enhance service
delivery, encourage citizen involvement, increase transparency of state
spending, and promote efficiency in government processes. This
direction was called for in Executive Order No. 4.
Appropriation $500,000 $500,000
2. Budget and Performance Management System
It is recommended that funds be appropriated to create and maintain a
budget and performance management system that will replace the
current legacy budget preparation system. This new system will also
automate the expansion and capital budgeting processes, and
incorporate the following elements of performance management called
for in Executive Order No. 3: strategic planning, performance tracking of
management functions, monitoring of program performance, improved
agency accountability, identification of agency inefficiencies, and
coordination in meeting cross-cutting state goals.
Appropriation $500,000 $500,000
Appropriation - Nonrecurring $2,750,000 $500,000
3. Federal Economic Recovery Management and Accountability
It is recommended that funds be appropriated to provide for the
operations of the Office of Economic Recovery and Investment in order
to maximize the State's use of available federal economic recovery
funds, report on the use of the funds, and measure progress of the
re